MTA mortgages offer month-by-month flexibility on payments, in accordance with a homeowner's budget, and this makes it a very popular mortgage product in the uncertain times that we live in. The MTA mortgage allows customers to refinance as and when they need, without the usual added costs of doing so. This is especially useful if you have a large loan and your income decreases - your payments can be lowered accordingly.
MTA mortgages follow the 12 Month Treasury Average indices, and how they translate more stable and predictable monthly mortgage payments for customers. An index comprises of a collection of commonly-used interest rate indexes, and lenders use this to work out the interest rate of variable mortgages. Each lender then adds their own percentage points, known as a margin, to establish their particular interest rate. The 12 MTA interest rate does not move up or down as rapidly as other market interest rates, because higher yields are balanced out with the lower yields over the 12 month period, meaning that the index is far more predictable. Indeed. MTA mortgages have never been subject to steep interest rate rises.
With an MTA mortgage, you get your statement each month, and can choose from four different payment methods, in accordance with your financial situation for that particular month. You can pay the minimum needed, or you may make larger payments if you are able to do so. The best thing about this type of mortgage is that there are no nasty payment hikes around the corner - there is a lifetime capped interest rate, so there is a limit to how high payments can go. Here is a quick guide to the four methods of payment you may choose from each month:
1. Minimum Payment Due - This is especially useful for those months when your income is stretched, and keeps your mortgage payment manageable. The minimum payment due changes each year, and is initially calculated using the interest rate from the first 12 months. Thereafter, the minimum monthly payment is calculated based on outstanding mortgage, the time left on the mortgage and the prevailing interest rate.
2. Interest Only - This is where the minimum amount is paid, along with any deferred interest for that month's payment. If the amount owed for the month is not enough to cover the monthly interest, then you can avoid further deferred interest by paying the minimum monthly amount plus the monthly interest. This way, payments are kept manageable, with no charges accrued on the monthly balance.
3. Fully amortizing payment options (over 15 years or thirty years) - Here, you pay a part off the principal loan and interest on that loan to fully amortize the loan over the set period. Payment is calculated each month, and is based on the previous month's interest rate, loan balance, and time outstanding on the loan. With this method of payment, you are clearing all interest due each month, and also paying an amount off the original loan.
MTA mortgages are offered by several lenders. If you are interested in this product, there are databases of the most competitive lenders available on the internet, so be sure to take a look at these.
For more in-depth information about mortgage mta or other mortgages come visit http://www.mortgagemta.com today.
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