With mortgage rates continuing on a downward trend, the competition in the business is fierce. A day never passes that I don’t hear some crazy advertisement about a new loan program that XYZ mortgage company has and no one else offers. One of the oldest programs remains steadfast in both its high profile and its duplicity. This program is the No Cost Home Loan — the one bankers say is free, but you actually pay for as long as you have the loan.

The no closing cost home loan is virtually everywhere. It is advertised in the mail, on radio and on TV all the time. “Hey, refinance your loan today, and there will be no closing costs,” the ads scream. Wow, a free loan. Imagine the money you’ll save. So, if you are in the market for a refinance loan or home equity line, which you probably should be, with rates at all-time lows, you might consider running to XYZ mortgage company, who is now offering free mortgage loans.

Just be careful you don’t go bankrupt, along the way. Remember, the old cliche, Nothing in life is free, because it makes a lot of sense. You actually can get a mortgage with little or no closing costs. What bankers don’t tell you (one of their great secrets) is that you pay a higher interest rate than you really qualify for, when you get your loan for “free.” So, you might save $2,000 or $3,000 in closing costs, but your monthly payment could be $100 to $300 higher than it would have been if you had actually paid the costs.

Imagine taking this loan and saving $2,000 in total closing costs. Perhaps you borrow $200,000. Now, if you simply pay all the costs and tell the banker you want the best rate available, let’s say it is 6% for this example, you would have a monthly payment of $1,199. Now, let’s assume the wiley banker convinces you to pay no closing costs and take an in terest rate of 7%. He might say, “Now, your interest rate will be a bit higher, but you’ll save $2,000 in closing costs.” Sounds great, you might think.

What he doesn’t do, though, is spell out the difference in the 6% rate you could qualify for, versus the 7% rate you choose to take for your “free” loan. If you borrow $200,000 at 7% interest, your monthly payment is $1,330. This is $131.00 more each month than you will pay on the same loan at 6% interest.

If you choose to pay the closing costs and save $131.00 monthly, it will take you 15 months to get your $2,000 in closing costs back. Now, if you keep this loan for five years beyond that first 15 months, you will save an additional $7,860 at the 6% interest rate. If you listen to the crafty banker, selling the No Cost Loan, you’ll allow nearly eight thousand dollars to drift right up your home’s chimney.

Unless the difference in the interest rate on your no closing cost loan and the loan with costs is a tiny amount, say .125%, you are almost always better off paying the costs. Be sure to ask what the difference in the rates is. Then learn exactly what the total closing costs will be. Calculate the difference in the two monthly payments (one with closing costs and one without). If that amount will pay back your closing costs in two years or less, and you intend to remain in your loan for at least five years, pay the costs and take the better rate.

Use this method, and you’ll never go wrong.

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Product Types

Standard Variable Rate

The Standard Variable Rate (SVR) is one where the lender sets its interest rate above the Bank Base Rate. This rate can rise or fall whenever there is a change in the Bank of England’s Base Rate. Lenders can be quick to react to rate increases yet slow to pass on decreases. There is no obligation to match changes to the base rate.

It is usual practice for a mortgage to be transferred to the SVR at the end of any discount or fixed rate period.

Fixed Rates

A fixed rate is what it says it is. The interest rate is fixed for a certain period. You will know the monthly payments over a set number of years. The downside is the loss of flexibility and increased early repayment charges if you repay the mortgage during the period.

LIBOR Rates

Some lenders calculate interest rates at a margin the London InterBank Offered Rate (otherwise known as LIBOR). This is very similar to the Standard Variable Rate; however the lender calculates the rate every 3 months. The amount you pay will be constant for 3 months. Because of the time lag against the Bank of England Base Rate, you could benefit by having a lower rate if interest rates start to increase, however the opposite could be true if they start to fall.

Discounted Rates

A discount mortgage offers a reduction off the lender’s standard variable or LIBOR rate. When the lender changes their rate, the interest rate will change, but it will remain at a set level below the SVR or LIBOR. A large discount will usually be for a short period followed by a further period at the SVR or LIBOR, during which time, you must stay with the lender or have to pay an early repayment charge to leave.

Capped Rates

By capping your interest rate you are effectively putting a ceiling on your interest rate but without fixing. The main advantage of a capped rate is that while the interest rate can fall it will not rise above a certain level for a fixed period of time. The maximum the capped rate can rise to is often slightly higher than fixed rates and discounted rates are often lower.

Bank Base Trackers

A tracker mortgage, literally tracks the Bank of England Base Rate. The lender guarantees to automatically match any increase or decrease that the Bank makes. The rate is set at a percentage above the Base Rate, however it is possible to combine these with discounted rates below the Base Rate (these can tie you in to a higher rate after the discount period ends). You benefit when rates fall, however when rates are increasing, a capped or fixed rate could be preferable.

Flexible Buy to Let Mortgages

With a flexible mortgage, many lenders will allow you to make overpayments. This can be used to plan the early repayment of a mortgage. You can usually ‘re-draw’ the overpayments when you want to which is particularly helpful when it comes to redecorating your property of for repairs.

Minimal Status

Just because you can’t prove a high level of income doesn’t mean you are a bad credit risk! Many of our lenders recognise this, for example; you may have been made redundant and have sufficient capital to live off. Alternatively your partner/spouse may have a substantial income and the finance/property may be far more efficiently placed in your name for tax reasons. Another reason maybe that you are simply unable to prove (by normal means) your true income position.

Overseas Mortgages

British mortgage lenders are often reluctant to provide mortgages to people who do not live or work in the UK. This is because their mortgage approval systems are designed towards information received from the UK Credit Reference Agencies and the lenders reliance on applicants having a provable UK source of income.

Mike Stepney is a key player at in the online department at The Money Centre. For more advice on property development and buy to let mortgages visit www.themoneycentre.net

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Background on Milton Keynes

Milton Keynes is one of the foremost up and coming places to live in the UK, with excellent road and rail links not only to London, but to other major cities in the UK including Manchester and Birmingham. Milton Keynes has so much to offer and attracts people from a multitude of different backgrounds which in turn brings a broad cultural and exciting environment to live, work and play. Situated in the middle of the UK you are never far away from the countryside whilst you can also experience all that city life has to offer.

Milton Keynes can boast excellent employment opportunities, living environments and recreational facilities in one of the UKs fastest growing areas. If you want to know more about what Milton Keynes has to offer then a good starting point is MKweb.

Useful Links

MKweb website with Information on Milton Keynes and surrounding area.

Multimap - Where is Milton Keynes?

Renting in Milton Keynes

There is a wide range of property available within Milton Keynes, everything from 1 bedroom maisonettes and bungalows, town houses suitable for growing families to large detached properties. All these range in price ensuring that no matter how much income there is available you should find a home in Milton Keynes.

The first thing to do before starting your rental search is to know how much you can afford to pay each month/week. Once your budget is decided then you can begin your research. The first and most obvious place is the internet. It is essential that you know what you can get for your money per month or per week before contacting the letting agents.

A good idea is to get a broad view of what property you can get for your budget, the best way is to check the online property portals. These offer properties that are available from a number of letting agents and give a vast selection so you will be able to get a general idea of costs from a number of letting agents in one place (saving time on trawling through 10s of websites). All of them offer either:-

Multiple Emailing Service
Email service to all agents advertised on the site, sending details of your requirements. The agent then contacts you with property details that may apply.

and/or

Property Specific Email Service
Email service to send directly to the letting agent your interest in a specific property advertised.

and/or

Website Click Throughs
Click through to advertised letting agents own websites.

A good example of a portal is Rentright Residential Property Letting Portal - Milton Keynes Page from here you can either email agents directly about your general requirements or you can refine your search and send email about specific property advertised on the site.

Rentright is only one of many property portals, if you do not find what you require from one then you may find it on another.

What to do next?

Make a note of the areas that you have found interesting property and then you can begin on the second phase of planning. This is the “area” research. People will always have different requirements of what they want, for example some people want quick access to the Motorway, or need to be on a bus route to the City Centre or maybe the local schools are important and the catchments areas. To find information like this then I would recommend a website such as Upmystreet, from here you can find a whole host of information to aid you in your decision of whether you would like to live in that area and it meets your requirements.

Shortlist

Once you have researched the areas and feel confident of the suitability then, if you have already found a property/properties of interest on the internet contact the letting agent and arrange a viewing. If not then you may consider visiting the agents websites directly and registering your details or making a trip to the town to visit the agents personally. Remember that it is also best to visit a property at different times of the day in order to get the overall picture of the area.

Top Tips

Chris Courtis is the co-founder of Rentright Property Letting Portal where you can find information and property for rent. Rentright is an advertising portal for local letting agents covering the UK.

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Once you have decided to live in a rented or leased home you must choose the place with care. Whether brand new or used you need to ensure that you do not sign a contract on a place that will become living hell with peeling walls, dripping faucets, or odors.

Advanced property management companies provide a ready to use check list which you can use during your walkthrough. This will ensure that you are not responsible for any pre-existing problems or faults. Most home owners or managers will do a move-out walkthrough to ensure that the leased or rented home is left by you in good condition. If any major damages are noted then you will have to pay for setting right the problem.

When you examine an apartment or house be vigilant and look for:

• Leakages. Try and see if there are any wet walls, peeling walls, or cracks. Even if there is a fresh coat of paint you will be able to feel damp on walls by placing your hands on different parts of the walls. Look for stains in the paint these are sure indications of water damage.

• Check that all appliances are in working order. Check utilities like gas, electricity, and water. Make sure there are no leaking faucets, clogged drains, or malfunctioning sinks or toilets.

• The front door and all other doors must be solid and not hollow, shut well, and have secured latching systems. Read through safety recommendations given by police departments and keep the recommendations in mind while checking doors, windows, and so on.

• Look for pests and mold infestations. Check wooden doors and cupboards for smells and fungi.

• Check whether the rental place has sufficient storage space and shelves for your books, clothes, and nick-knacks. Make note of existing furniture so that you can then decide what to bring with you and what to store.

Note down how many rooms the place has, whether there is a basement for laundry and any common areas like a patio or terrace. Find out whether tenants are permitted to store things in the basement area. Ask about secure parking, whether plants and pets are welcome, and security arrangements.

Important things are: the condition of the neighborhood, the crime rate, who stays next door, what the tenancy rules are, transportation and proximity to schools, colleges, hospitals, and parks.

Ask old tenants, colleagues, as well as neighbors about the apartment. Casually chat with locals, shop owners, and restaurant owners or waitresses about living in the area. Be smart and look for clues in their answers. For extra safety, check with the police about how safe the neighborhood is. These days one cannot be too careful and crime rates are on the rise.

As a renter you need to weigh the pros and cons carefully and ensure that the apartment or house really meets all your requirements.

Andrew Bermam is a freelance writer for http://www.1888MovingCompanies.com , the premier website to find help on Moving including topics on moving companies search, compare movers, moving insurance, auto transport, moving tips and more. He also freelances for Airline Tickets Site http://www.1888Airlinetickets.com

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