Homequitybuilder

A few months ago, this Site (along with Htmail services) sponsored a consumer survey regarding our pending UK mortgage loan product, the Alternative Mortgage Fund (AMF).  The results of that survey are published in this Blog, but it is estimated that the AMF should attain approximately 5%-6% of the entire UK mortgage market.  As a follow-up, we are posting this new consumer survey- which will better allow us to more accurately determine the potential market share.  Please help us help the UK homebuyer/ homeowner with a BETTER mortgage alternative!

The benefits of the AMF are essentially a faster loan principal paydown than the conventional mortgages out there- all with normally no additional fees or costs.  Build your home’s equity faster!  The AMF is a combination between a fixed and a variable rate mortgage, and we would like your opinion on the following example and comparison:

L250,000 initial mortgage loan amount- 25 year term (current BOE rate- 5.75%)             

Values listed below are for the END of the initial 7-year period (most UK homeowners stay in their homes for between 7-10 years only).  “Rate” change below is the BOE base rate change from the loan’s origination point.

The AMF below is being compared to a currently offered 5-year fixed mortgage with a fixed rate of 6.70% (for Years 1-5) and a variable rate of 6.79% or BOE + 1.04 (for Years 6-25).  Under Zero net interest rate changes, the monthly and yearly payments of both conventional and the AMF loan are nearly equal.  The following chart shows the Net benefits for the consumer in using the AMF loan with differing interest rate changes:

Rate Change          Payments   PRINC. paid    NET +/- for Consumer

-3.00%          AMF  L145,355   L55,774         AMF ahead L7,823 overall

                     TYP  L136,162   L38,756      

-2.00%          AMF  L145,355   L52,657         AMF ahead L7,436 overall

                     TYP  L138,892   L38,756   

-1.00%          AMF  L145,355   L49,541         AMF ahead L7,190 overall

                     TYP   L141,760  L38,756    

0.00%           AMF  L145,355   L46,424         AMF ahead L7,079 overall

(no change)   TYP   L144,766   L38,756  

+ 1.00%       AMF   L145,355   L41,674        AMF ahead L5,467 overall

                    TYP   L147,904   L38,756    

+ 2.00%       AMF   L148,467   L40,635        AMF ahead L4,908 overall

                   TYP    L151,496   L38,756      

+ 3.00%       AMF   L153,217   L40,635        AMF ahead L3,202 overall

                   TYP    L154,540   L38,756     

Note the overall consumer benefit of the AMF vs a popular 5-year fixed mortgage scheme in ALL of the listed interest rate scenarios!  This is due to the inherent structure of the repayment of the AMF loan- it directs more of your monthly payments to paying down the loan’s principal amount.  Also note that the AMF is NOT the type of mortgage scheme which allows for the least amount of “out-of-pocket” initial monthly payments.  If that is your most important concern there are some better mortgage options, like the 2-year fixed mortgages with a very low initial (teaser) interest rate attached.

For some further information, please see some of the other postings on this Site.  Also note that the AMF is not currently available, but we are now seeking the necessary arrangements in order to bring our product to market via a partnership with an established UK bank/ lender.  The AMF is not currently listed or approved by the FSA; our application is pending.  Your input and comments will assist us in this goal by providing needed consumer-direct feedback.

Based on the previous example and the information provided, what is the likelihood that you would sign onto the AMF vs. a conventional 5-year fixed mortgage?

A) Over 50% likelihood would switch to the new AMF

B) Between 30%-49%

C) Between 20%- 29%

D) Between 10%- 19%

E) Between 1%- 9%

F) Zero %

Thank you for your time and participation.  For more information, please contact amfinfo@comcast.net. (temporary email address and product website only)

This entry was posted on Saturday, August 11th, 2007 at 9:22 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.