| |
| |
|
Mortgage & Refinancing Information |
|
|
|
The Truth behind Pension Mortgages
A pension mortgage may seem lucrative at the first sight. However, they seldom are, if the customers who took pension mortgage are to be believed. Nevertheless, before delving into the ill consequences of the mortgage, let us observe why pension mortgages seem lucrative. The most eye-catching feature of pension mortgages, which lures people, is that the pension mortgage requires to be paid out of the pension amount, which one receives on retirement. This is the feature, which drives people to go for pension mortgages. While in most of the mortgages, the customer would have to pay the full repayment amount himself; in pension mortgage, he gets assistance from the government, though not directly. To every 78p, which a person contributes to the pension fund, the government contributes 22p (This is for a basic rate taxpayer. In case of those who are high rate taxpayers, the ratio changes to 60:40. This means that for every 60p contributed by the customer, governments share is 40p). Therefore, a customer is actually paying just 78 and 60 percent respectively. Besides, the customer is also getting tax relief for paying into the pension plan. People normally do not like to burden their present life. Their optimism assures them that their future will be secure. Pension mortgage is basically an interest only mortgage. This means that they will have to pay significantly less on the mortgage as they are paying only the interest. People who desire more of immediate relief shall be pleased with the idea of paying less. However, they have to pay the mortgage amount drawn. At the end of the term of repayment of the pension mortgage, the principal amount will remain unaffected. This is because all through the period of repayment the customer has been paying just the interest. This principal amount will have to be repaid with the help of pension. Normally 25% of the pension amount is available in cash. This may be used to pay the pension mortgage. Taking these into account, pension mortgages seem to be the perfect mortgage. Neither is the customer forced into paying more on the monthly installment, nor does he face any difficulty in the final repayment. But, what of the life after the pension mortgage is paid. Is the life ahead as smooth as the repayment? No, it is not. You have retired and have lost a source of income. You are not in the prime of age to device new sources of income. You need something to rely upon once you retire. Utilizing cash from pension fund for paying a pension mortgage will be inappropriate. This reduces the amount of pension available for the customer to use. Another feature, which can be seen as exploitative, is that one cannot go for full and final repayment until the age of 50. This is because a person is not authorized to use any part of the pension fund before they reach the age of 50. Therefore, one will be able to repay the pension mortgage before maturity only out of other resources. Yet another feature of pension mortgage, which will give you goose bumps, is that there is no guarantee of the pension fund being able to pay the pension mortgage. A pension fund is an investment linked to the stock market. The amount available on the pension fund will depend on the whims of the stock market. Thus, there can be a scenario where the lump sum received through pension is not able to pay the pension mortgage in full. The borrower in such cases may be called upon to meet the deficit through other resources. A similar scenario may occur when the borrower is not able to pay into the pension fund because of unemployment or death. The house will be repossessed to pay off the pension mortgage. Taking a life assurance policy can be a counteractive measure. This will help pay off the pension mortgage at the time of repayment. There are numerous lenders in the UK offering pension mortgages. Many of the lenders are available online. After having screened the lenders and making a list of few lenders, it will be good to contact the lenders personally. Before taking a pension mortgage one must be extra vigilant. A pension mortgage can endanger your after retirement life. Unbiased and professional advice on the viability of pension mortgage for your individual case will be beneficial. Aditya Thakur works for UK secured loans web site . To find a UK secured loan that best suits your needs visit http://www.ukfinanceworld.co.uk
MORE RESOURCES:
Mortgage-Refinance - Google News |
|
|
|
RELATED ARTICLES
Getting The Best Rates On Mortgages And Loans With an impending up-grade to the family due in a few months it soon became clear that our two-bedroom home would need an addition. We loved our house too much to consider moving. Home Loans For People With Bad Credit - Tips To Getting Approved Online Buying a home with bad credit doesn't have to stop you from finding an affordable lender. By shopping online for a lender you can find the best lending rates for your situation. Applying for a Home Mortgage Loan Online - The Pros and Cons If you have considered applying for a home loan mortgage online, there are a few pros and cons to think about with getting a home mortgage loan online:Pros:1. The process of applying for an online home mortgage loan is very simple, unlike some lenders who operate in the 'real' world and ask for heaps of information. Should You Choose to Refinance? Refinancing has become a valid option for many individuals with high interest rates on their mortgage. Refinancing is essentially a replacement loan, with a different lender and (hopefully) a lower interest rate. Mortgage Loans For People With Adverse Credit - How Much Should You Borrow "How much should you borrow?" is a question people with adverse credit wrestle with. The answer is simply as much as you can afford. 6 Helpful Mortgage Tips Here are some mortgage tips that can help you obtain a mortgage with less hassle, and at a lower overall cost: Determine how much home you can afford. Based on your income and any long term debt, know the maximum payments you can be certain of making comfortably. Where To Find The Best Rates For Your Mortgage? As with all of my articles this will be based on a scenario in my home town. (Which may be similar to yours). Refinance Online If you want a low interest, low payment mortgage refinance, refinancing online could be the answer. There are many mortgage companies who specialize in mortgage refinancing online. Foreclosure Scams To Be Aware Of Homeowners facing foreclosure should be aware of unscrupulous lenders and scammers. Don't get me wrong, most lenders and agencies are reputable and legit. Home Equity Loan Tax Deductions Interest - is an amount you pay for the use of borrowed money.Several lenders are currenty offering amazing deals for 125% home equity loans. Buy a Home With a Government Grant? Avoid this Scam If you watch enough late night television, you'll see advertisements that suggest that the Federal Government is giving all kinds of things away. You'll see ads for auctions that promise that you can buy a Ferrari for $500 or a home for $1000 through "government liquidations" or some such thing. No Money Down Home Loan Are you in the market to purchase a home but are concerned about not having enough money for the down payment? No down payment home loans or 100% financing for your mortgage loan used to be only advertised during late night infomercials and in obscure real estate publications. The good news is that if you want to buy a house but have little or no money available for the down payment, there are mortgage lenders who are offering no money down home loans in your area. Are Biweekly Mortgages Really Worthwhile? You may have heard people, especially mortgage lenders, extolling the virtues of biweekly payments, saying that you can save thousands of dollars and take 5-7 years off your mortgage--and then offering to set up a biweekly plan for you for as little as $400. But you don't have to spend $400 to begin saving money and time on your mortgage. Tips On New York Mortgage Refinance Loan Many homeowners want to know if it worth taking a New York mortgage refinance. How do you know if New York mortgage refinancing makes sense in your case? Read on to understand when you should refinance and how to go about doing it. Kingsland Georgia Mortgage Company Information For Homebuyers Transferring to Kings Bay If you are transferring to the Kings Bay Georgia Naval Submarine base, more than likely you will need a lender to buy a home.VA mortgages provide military homebuyers with 100% financing to buy a home. Bad Credit Mortgage Loans Online - How Your FICO Credit Score Can Affect Your Loan Approval When applying for a mortgage loan when you have a bad credit history. There are a few things you should know about your FICO score that will help you know what to expect from mortgage lenders. Sorting through mortgage elimination programs Mortgage elimination programs are all the rage these days. In the event that you don't know what they are, it's a really basic concept. Shopping for a Mortgage, Avoid Three Common Mistakes Buying a home or refinancing one is perhaps the largest financial transaction you will ever make in your life, so you want to be sure to avoid any mistakes that may cost you in the long run.When you are deciding on a mortgage, you certainly don't want to make your decision by flipping a coin. Before You Buy Before you start looking for a home, figure out what you can realistically afford to pay per month. Check out the market in the area you want to buy. An Infinity Mortgage? Here in Spain the concept of a mortgage period of 20 or 25 years is something new. The general feeling by the banks is that want their money back more quickly than banks in countries in which they are accustomed to longer periods.
|
| home | site map |
| © 2006 |
