The 8 Types of Mortgages

Mortgages can be scary for first time buyers. It may help to understand the different types of mortgages when you apply for a mortgage. Here are the 8 most common types of mortgages:

Repayment Mortgage – This is the most typical mortgage. You pay back the principle you borrowed along with the interest applied in fixed (typically monthly) installments. Fixed Rate Mortgage – This means the interest rate that the bank gives you is fixed for a specified period of time. It is a safe mortgage because the monthly payments do not change over time. Standard Variable Rate (SVR) Mortgage – The rate is changed by the banks typically to reflect how the economy is doing. This rate typically follows the LIBOR or Federal Funds Rate set by the central banks. Interest-Only Mortgage – This mortgage pays off the interest before principle. After the interest is paid off, the borrower starts to pay off the principle amount he or she borrowed. Federal Housing Administration (FHA) Loan – These loans protect people who may not be able to pay back their …

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The Real or Time Value of Money

The time value of money is one of the cornerstones of the financial services industry and indeed the investment community.

In relation to personal financial planning, accumulating funds to cover future needs is a constant topic. These needs can be providing Life Assurance cover to provide for dependants, saving to grow a capital sum or perhaps investing a lump sum to grow and be drawn down in the future.

It is important to understand that the value of a  Euro changes over time, a Euro invested today will accumulate over time with interest to amount to more than a Euro. Due to inflation, a Euro in 20 years will be worth less than a Euro today, that means the goods and services you can buy today with your Euro will cost more in 20 years.

Think about the penny sweets you could once buy versus what you get for a penny today, or indeed anything you could buy for a certain sum versus what it costs today.

So when assessing a future financial need allowance should be made for anticipated …

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Clawing your way back

I thought it would be interesting to show a small table that outlines the issue with losing money, the figures below show what you have to ‘make back’ to get to break even depending on a certain amount lost.

Loss Return needed to regain original sum -5.00% 5.26% -10.00% 11.11% -20.00% 25.00% -30.00% 42.86% -35.00% 53.85% -40.00% 66.67% -50.00% 100.00%

It’s easy to see that it gets harder to get back to zero the further you fall, the most obvious example being that you need 100% growth to break-even if you lose 50%! Just something to keep in mind as you are investing or weighing up risk in the things you invest in.

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A Conversation with Tony Boeckh, author of ‘The Great Reflation’

I waited a long time for a conversation with Tony Boeckh, his newsletters are a must read for anybody looking to keep a finger on the pulse of the markets both in the USA and internationally, you can sign up for free at the homepage.

Tony’s career has spanned over 40 years and during the entire time he has focused on banking and credit, starting in the Canadian central bank, then taking over the helm at the industry stalwart publication Bank Credit Analyst. His recent book ‘The Great Reflation‘ is a culmination of thoughts on the future of finance and what trends we can expect, and perhaps more importantly, the trends that investors can profit from.

My questions are in bold.

You look at the world in a very macro sense, what indicators, given the span of your career, have you found to be the best guides? Interest rates? flow of funds?

“That’s a never …

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