Author Archive
Estate Planning – The Mortgage – To Pay Or Not to Pay
Where does your home mortgage fit into your financial planning and particularly into your estate planning? In the world of yesteryear, the chief goal was to pay off the mortgage and hold the property free and clear. Higher land prices, higher building costs, and fluctuating interest rates have changed the landscape of the housing market, with instruments available from flexible interest schedules to interest-only mortgages, in which the buyer never actually purchases the property.
There are advantages to paying off your mortgage as quickly as possible and there are disadvantages as well. It just depends on your needs and your aims for the future, which route you should take. Say, for example, that you had just come into a lump sum of money – from a stock market windfall, inheritance from Uncle Joe, or some other pile of cash that gave you the option to pay off your mortgage and be done with it, or not.
Some things to consider in contemplating this matter include:
- Are you still working and intend to be working for 20 more years, or are you nearing retirement age within the next few years?
- Do you intend to retire in the home, or move to another retirement location altogether?
- Do you have children who would want to inherit the family home?
- Are you in a stage where you are actively trying to build a retirement nest egg?
- Is the interest rate on your mortgage high or relatively low?
- Do you need extra tax deductions or is that immaterial?
The answers to these questions can help you determine whether you want to use the extra money you have available for paying of your mortgage or put it to other uses.
If the following statements describe you, paying off the mortgage is the best option:
- You are a person who craves personal security and don’t like the worry of having a mortgage hanging over you.
- The interest rate on your mortgage is higher than that which you are currently earning on your investments.
- You would like to have money available to begin, or contribute more heavily to, an investment or retirement program.
- You don’t intend to retire in the home, but want to buy a smaller home by the lake, mountains, river, in the tropics, etc.
- Your mortgage is near to being paid off (within 10 years) so you are now paying more principle than interest.
- You have enough money to pay off the mortgage and still have a healthy savings account.
If these statements best fit you, you may want to ignore the mortgage and use the money for other purposes.
- The interest rate on your mortgage is lower than the interest rate you are receiving on your investments.
- You have more than ten years till retirement and are able to comfortably handle the mortgage payments and don’t anticipate any change in that situation.
- Paying off higher interest credit cards would be more beneficial to your financial situation than paying off a low interest mortgage.
- You still have 20 years to pay on the mortgage so there is a significant amount of interest still to be paid before you begin to seriously impact the principle.
These are questions that your estate planner or estate planning attorney can help you resolve by listening to your plans and making suggestions.
Bad Credit
Bad credit can happen to the best of us. A series of financial
events can take place to hinder our ability to pay our debt. A
loss of a job or several high paying emergencies, whether it
be health related or due to car and house repairs, can put one
behind in making payments.
Many times people will ignore their late due payment notices for
loans which can be the worst possible thing to do. Most of the
time when you notify your bank or lender and tell them of the your
financial situation, they are willing to work with you. Some banks
will set up a payment plan that will work better for you until you
are back on your feet. Some will allow you to make payments only on the interest of a loan and not the pricipal for several months or whatever you may be able to work out with the financial institution. But ignoring notices tells the bank exactly
what you don’t want them think, that you don’t care about paying
back your debts.
Don’t let pride get in your way of asking for help. Financial institutions,
for the most part, want to help when you are in a money bind. Allow
them to work with you on a payment plan that will suit both your needs.
Connie Barker
Personal Loans – Loans Without Collateral
Basically, a personal loan is an unsecured loan where you don’t have to put your property as collateral in order to procure a loan amount. There are 70 types of lenders in the UK offering personal loans. The lenders include traditional high street banks, building societies, online banks, supermarkets and the private lenders.
Personal loan can be sought for varied purposes like going for a holiday trip, buying a car, consolidating your credit card debts etc. The risk associated with the lenders is high, that is why they prefer to offer a personal loan to the people with a perfect credit history. The personal loan amount varies form