Mortgage and Financial Planning
If you are involved in the early stages of financial planning as a first time buyer, you understand how closely you must monitor your monthly expenses. Fixed rate mortgages can insure that your mortgage payments do not fluctuate. A fixed rate mortgage for two years has become a popular choice for buyers interested in lower rates and the ability to liquidate the property without financial penalties.
Mortgage terms with little or no setup costs will help keep your rates low. Because of the additional expense it's important whenever possible to choose a mortgage that does not require you to purchase a mortgage insurance guarantee. Having a sizable deposit available can prove very beneficial. In order to add flexibility to your payment and loan options it is also important to obtain a loan without early redemption penalties.
Growing your Family
In any economic situation additions to your family can be costly. This is the optimal time to carefully consider controlling the cost of your mortgage by fixing the rate for a longer period of time. Many also find it possible to extend the home with modifications using its growing equity to finance the project.
Education Expenses
It is not unusual for the family finances to fall behind the growth of your family, saving for your retirement and funding the cost of a private education. Many first time buyers are able to avoid this additional expense by moving into an area with a highly rated state school. For those unable to relocate, drawing from the home equity is an alternative solution.
In order to avoid "top-up" fees you may want to consider removing a lump sum and placing it in a savings account from which you can withdraw at the beginning of each term to cover the cost of funding your child through the university stage. Remember to fully discuss your options with your mortgage broker during your financial planning sessions. While this method may seem expensive from the outset, keep in mind that it is possible to find a fixed or discounted mortgage that offers lower rates and longer terms than you may be offered with a flexible mortgage.
Students
A smart financial move when considering housing is to consider purchasing a property large enough children who are still in school but which can also serve as a rental property. When the property is placed in your child's name you can avoid capital gains taxation on the sale and reduce tax in the interim. Retaining control of the property and its subsequent rental income and mortgage payment may be classed as a buy-to-let mortgage for which you will be required to deposit a higher amount in some location. The amount the lender is able to provide is in most cases directly related to the expected rental income.
Home alone
During the later stages of life as your children become self-sufficient greater attention can be paid to the resolving of your debt in a timely fashion, utilizing regular overpayments or a lump sum reducing the overall interest paid. Choosing a fixed loan in this situation will lower the interest paid and enable you to resolve large portions of your mortgage amount each year without additional penalty.
The Golden Years
Those who are able to pay off the mortgage amount through careful financial planning are left with large amounts of home equity and often reduced liquid assets. Home equity may be converted into cash assets through a re-mortgage. Considering at this stage an equity release or home income plan can negate the need for monthly payments.
Using these programs you can easily receive your home equity as either a lump sum or income in the form of annuity payments.
^This article does not constitute financial or other advice and is intended to provide only general discussion and should never be used in place of professional advice. We accept no responsibility for any loss arising from any action taken or not taken by anyone using this material or in reliance thereof.