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  #41  
Old 30.12.2014, 14:52
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Re: Type of mortgage on current rates

It depends on the terms and conditions, but you have a couple of options.


1. You can sell the property with the mortgage. The new owner can take on the debt.


2. You transfer the mortgage to the new property... as long as the value of the property (as determined by the lender) supports the value of the mortgage.


3. You could repay the mortgage early, but will likely have to pay a penalty too.


It might be possible to do a combination of 2 and 3 as a fourth option, but I am not sure about that.
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  #42  
Old 25.02.2015, 10:05
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Re: Type of mortgage on current rates

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late reply, sorry. it's a 65% mortgage with an insurance co, not a bank.

Can any one who recently concluded a 80:20 mortgage share the rates? I am getting offers in the range of 1% for 5Y and about 1.4% for 10 years. Does that sounds like the current range?

I know interest is a function of Risk and individuals profile and can vary but min is like <35% interest / Income coverage and like mentioned putting 20% cash.
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  #43  
Old 25.02.2015, 11:22
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Re: Type of mortgage on current rates

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Can any one who recently concluded a 80:20 mortgage share the rates? I am getting offers in the range of 1% for 5Y and about 1.4% for 10 years. Does that sounds like the current range?

I know interest is a function of Risk and individuals profile and can vary but min is like <35% interest / Income coverage and like mentioned putting 20% cash.
Your range sounds about right. For a 60:40 mortgage we are about to sign a contract for 10 years at 1.27% with CA.
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  #44  
Old 25.02.2015, 13:33
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Re: Type of mortgage on current rates

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Your range sounds about right. For a 60:40 mortgage we are about to sign a contract for 10 years at 1.27% with CA.
i have to say the rates are astonishing right now. if you really felt you had your home for life you can also fix for 15 or even 20 years. yes you are bound to that home (or could rent it out) but you also know your cost for life and relatively speaking its peanuts.
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Old 25.02.2015, 15:01
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Re: Type of mortgage on current rates

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i have to say the rates are astonishing right now. if you really felt you had your home for life you can also fix for 15 or even 20 years. yes you are bound to that home (or could rent it out) but you also know your cost for life and relatively speaking its peanuts.
Yaa you are right, but it is not a bargain as one is paying price which is more likely to correct. But I hope the gains from the interest and the correction in prices will even out the deal.

Coming back to Interest rates, any more pointers or experiences?
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  #46  
Old 25.02.2015, 16:02
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Re: Type of mortgage on current rates

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Yaa you are right, but it is not a bargain as one is paying price which is more likely to correct. But I hope the gains from the interest and the correction in prices will even out the deal.

Coming back to Interest rates, any more pointers or experiences?
it might not be a bargain then, is what you mean. because prices might correct, which could be offset by mortage savings, or they might not correct, in which case it is a bargain.

the low interest rate is a bargain. its defined and you buy it.

the "imminent price collapse" of swiss housing might be a disaster, but its speculation.
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  #47  
Old 25.02.2015, 16:22
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Re: Type of mortgage on current rates

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the "imminent price collapse" of swiss housing might be a disaster, but its speculation.
OK. It might be speculation, but I don't know anyone who currently says that the market is undervalued. With this kind of sentiment, it is pretty sure that we are in a bubble with regards to the housing price. I belive we will experience a correction at some point... as soon as rates start to rise. Fingers crossed it is a slow and stable correction. So, why did I buy right now? Well my family life means that I needed a house and garden now.... waiting for prices to correct is not really an option. 2ndly, I too am hoping that having a fixed low rate for 10 years will soothe the pain of any impending correction.
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  #48  
Old 25.02.2015, 17:18
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Re: Type of mortgage on current rates

I have personally experienced 30-50% declines in housing markets both in Texas and California. Both markets came back to prior nominal levels in five or six years. The current market value of your house/condo is just a number, which only matters when you are buying or selling, and to a lesser extent refinancing. Taking a ten year fixed interest mortgage at all time low interest rate gives you a good bit of staying power. Taking a variable rate mortgage at all time low interest rates is a risky bet. I watched many co-workers lose houses due to variable rates going up dramatically in the 1980's.

Keep in mind that just as the SNB can move the Euro peg overnight, the SNB can raise rates overnight. I purchased my first house not too too long after Paul Volker (US FED, similar to Thomas Jordan at the SNB) raised rates to 17%, which caused one of the above mentioned 30%-50% housing market declines.
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  #49  
Old 25.02.2015, 17:19
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Re: Type of mortgage on current rates

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OK. It might be speculation, but I don't know anyone who currently says that the market is undervalued. With this kind of sentiment, it is pretty sure that we are in a bubble with regards to the housing price. I belive we will experience a correction at some point... as soon as rates start to rise. Fingers crossed it is a slow and stable correction. So, why did I buy right now? Well my family life means that I needed a house and garden now.... waiting for prices to correct is not really an option. 2ndly, I too am hoping that having a fixed low rate for 10 years will soothe the pain of any impending correction.
when a bank gives you a rate, its so they will make a profit, or nothing at least. not a loss. so if your bank will currently offer you 1.2% for 10 years. they are therefore predicting that in ten years time if they left the money in the natural moneymarket rate, they are going to earn less than that. so the banks at least, dont think that big interest rate rises are coming.

So you can make of that what you will, but the "pretty sure" sentiment that a house price correction is coming, perhaps isnt shared by the banks. I wouldnt expect prices to rise much in the near future, but I am not sure there will be a wholesale crash as some predict.
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Old 25.02.2015, 17:50
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Re: Type of mortgage on current rates

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when a bank gives you a rate, its so they will make a profit, or nothing at least. not a loss. so if your bank will currently offer you 1.2% for 10 years. they are therefore predicting that in ten years time if they left the money in the natural moneymarket rate, they are going to earn less than that. so the banks at least, dont think that big interest rate rises are coming.

So you can make of that what you will, but the "pretty sure" sentiment that a house price correction is coming, perhaps isnt shared by the banks. I wouldnt expect prices to rise much in the near future, but I am not sure there will be a wholesale crash as some predict.
Clearly you were asleep in 2007 when the banking system virtually collapsed as banks made loans that they will loose money on. If prices fall 40% banks will be at huge risks as most properties have 65% mortgages or greater.
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Old 25.02.2015, 18:03
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Re: Type of mortgage on current rates

plus it doesn't mean that the bank thinks that the rates may not increase. they could very well have just packaged off those risks and sold it to our pension funds
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  #52  
Old 25.02.2015, 22:08
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Re: Type of mortgage on current rates

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Clearly you were asleep in 2007 when the banking system virtually collapsed as banks made loans that they will loose money on. If prices fall 40% banks will be at huge risks as most properties have 65% mortgages or greater.
Ok so we get to the same argument we've had before. If the banking system collapses or prices drop by a huge amount homeowners are stuffed. Completely agree. If they don't, or if prices just level off, the current rates are great deals.
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Old 26.02.2015, 08:07
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Re: Type of mortgage on current rates

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Ok so we get to the same argument we've had before. If the banking system collapses or prices drop by a huge amount homeowners are stuffed. Completely agree. If they don't, or if prices just level off, the current rates are great deals.
A fixed rate is the area under the 3m libor curve for the next 10 years + the banks standard margin + an extra margin.

In theory buying 3m libor for yourself, over the length of the term should be cheaper than buying the fixed rate.

HOWEVER the whole point of the extra margin is that it is a fee that you pay to the bank to transfer risk. Even if the long term 3m Libor rate stays as is, borrowing at 1.2% is a wise move.
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  #54  
Old 26.02.2015, 09:58
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Re: Type of mortgage on current rates

The thing is, a lot of the logic about market forces etc is completely screwed up at the moment. The main reason the rates are so good is that there is so much Quantative Easing going on. Basically, central banks are printing money, and then buying bonds. This drives up the price of the bonds and threfore reduces the yield, and also therefore reduces fixed interest rates. So, interest rates are artificially low as a result.

At the same time, stock markets are at a high. It wuld appear that the market is beginning to think that equities are better investments...

I wouldn't be surprised if all the quantative easing does lead to inflation, which would make equities a really good bet. I also think this is how we will see the correction in the house prices... rather than a visible decrease, prices will decrease in real terms as inflation appears.

If this happens, Miker's is right. Intrest rates at the current rate are a bargain, and debt holders could be winners in the future...
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Old 26.02.2015, 11:10
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Re: Type of mortgage on current rates

....If this happens, Miker's is right. Intrest rates at the current rate are a bargain, and debt holders could be winners in the future...[/QUOTE]

No debt holders will not be winners if they don't have any money to make the monthly payments in case they have no job or pension or any money or Gold put aside. The bank will take over the property.
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  #56  
Old 26.02.2015, 12:39
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Re: Type of mortgage on current rates

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No debt holders will not be winners if they don't have any money to make the monthly payments in case they have no job or pension or any money or Gold put aside. The bank will take over the property.


Yes, I should have stated that assuming the debt was used to buy an asset rather then spend on beer and fags. The reason I said that they would be winners is that in this scenario, the debt will be eroded by inflation... and as a result they effectively are paying back less than what they borrowed. In that sense it is a win.
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  #57  
Old 26.02.2015, 14:25
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Re: Type of mortgage on current rates

House prices falling in some regions already:

http://www.globalpropertyguide.com/E.../Price-History

Doesnt have much more than the UBS quarterly report but quite interesting reading.
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