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Worried about the payment shock from your 5-year fixed mortgage plan after the initial years are over?  Or are circumstances leading you to repay your balance during the initial period- costing you between 3,000- 7,000 pounds in charges?  Looking for a better, smarter mortgage alternative?

KL Mortgage Enterprises LLC (USA- based) and Alternative Mortgage Funding Company are excited to announce a brand new, revolutionary mortgage product called the Alternative Mortgage Fund (AMF).  The AMF will save your hard-earned money, and will also help shield you from the dreaded “payment shock” when either your mortgage scheme resets or the BOE raises its rates.  The AMF does this by applying more of your monthly payments to the loan’s principal paydown.  Just look at the following sample:

EXAMPLE: 250,000 loan amount/ 25 year term

Comparison of the AMF vs. a conventional 5/20 fixed mortgage (6.00% initial fixed/ BOE + 1.50% -currently 6.75%- after Year 5).  Both loans will accrue the same amount of interest payments over the full 25 year loan term, with no extra upfront costs or fees for the AMF.

*For simplicity, all numbers below are assuming no NET changes in the BOE base rates over the listed term.  The AMF is a combination of a fixed and variable mortgage.  As such, when the base rate rises, the borrower is affected less than the typical tracker or standard variable mortgage.  For further details, please contact the email addresses listed or feel free to post a comment.  Note that all values listed below are cumulative- from loan onset to Year noted.

Year Extra payments w/AMF  Extra PRIN pd w/AMF  AMF Net Benefit

  1           1102 pounds             1440 pounds         +342 pounds   

  3           3306 pounds             4122 pounds         +836 pounds

  5           5510 pounds             6485 pounds         +975 pounds

  7           4948 pounds             8493 pounds        +3545 pounds

  10         4105 pounds             10,730 pounds      +6625 pounds

Note the overall benefit of the AMF during the first 5 years of the mortgage, but also look at the incredible benefits should your mortgage last longer than the base 5 year period!  Many homebuyers choose a 3 or 5 year fixed mortgage scheme, and end up staying at their home much longer than this initial term.  If that’s you, it’s easy to see the advantage of the AMF if you think there’s a chance of staying in your home longer than 5 years.  In addition, the AMF has a very minimal early repayment charge (1% of repaid balance for the first 2 years of the loan only).  Compare that to most fixed rate schemes where an early payoff could cost you over 6,000 pounds!

As noted above, the AMF is not intended to be the mortgage scheme that allows for the least out-of-pocket payments from the borrower; it is a more conservative loan product which will benefit you from additional principal being paid down with each of your monthly repayments.  This additional principal gets deducted from your loan payoff amount when the time does come to move house or remortgage.

The AMF is currently not available, but we are now seeking the necessary arrangements in order to bring our product to market as soon as possible.  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 on to 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@blueyonder.co.uk   OR   amfinfo@comcast.net 

We’ve all seen the catchy advertising- on TV, in the newspaper, online, etc. 

“$525,000 mortgage for only $1700/ month!”

“Do you think you’re paying too much for your mortgage?  Call us today!”

The obvious answer to this second question is- “Of course I’d like to pay less for my mortgage payment”.  But at what cost?  These ads are not too clear on the details and repercussions.  But let me have the honor of doing so:

These types of loan programs were originally designed for the financially savvy and relatively affluent homeowners/ homebuyers who could easily afford to pay the conventional mortgage payments each month, but who would rather use (invest) that money elsewhere.  Towards the goal of a larger return on their money than by merely paying down mortgage principal.

There are numerous problems with this theory.  The most significant is that in today’s market about 90% of the consumers who are electing for these “low payment” mortgage programs are not going to invest any of the savings.  Instead, they are either getting into a home priced well above their means OR they are spending their monthly savings on any number of necessities:  week in Aruba, new 50″ plasma TV, inground pool, etc.  When the low payments end, they cannot afford the newly altered payments AND/OR they have not “saved” any of this found money during the interim in order to pay for their pending shortfall.

And for the 10% of people who legitimately are entering into these types of mortgages, outearning the principal paydown is not as easy at it seems.

If you compare an Interest-Only mortgage with a conventional 30 year amortizing loan, the break-even point is approximately 6%.  If you took all the savings and deposited it into a typical mutual fund (with no sales charges, no maintenance fees, and an expense ratio of 1.75%), this mutual fund would need to average 6% gross ROI per Year (every year) in order to outweigh the amount of Principal paydown you would have paid in a conventional mortgage- after all taxes.  Even if the mutual fund returned an average of 12% per year, your net gain in this transaction would still be under $4,000 (assuming an original loan amount of $250,000- totals taken after 7 years).  And as anyone who has lost a significant amount of money in the stock market would tell you, gaining 12%- or even 6%- is hardly a given.

If you compare the Interest-Only loan to the new Alternative Mortgage Fund (AMF), you will see the results are even more drastic.  If we assume even a 12% annual ROI from the mutual fund invested in, you would still be better off- by OVER $9400 after 7 years- by paying down the loan Principal in the AMF structure than by trying your hand at the Interest-Only mortgage.

Much of the above is due to the fact that the typical Interest-Only mortgage is usually set at 0.35% or 0.40% higher than the similar conventional loan.  So you are paying more for the “privilege” of delaying you loan principal paydown.  But conveniently most of those glossy ads don’t have that fact appearing in bold letters.

I will say that in some (minor) instances, these Interest-Only and Payment-Option mortgages have their place.  But overall, they are another group of products that are promoted to make the mortgage broker and industry a quick dollar- regardless of the potential repercussions.

-KL Mortgage Enterprises, LLC   (amfinfo@comcast.net)

Read on to see how the Alternative Mortgage Fund (”AMF”) could save you OVER 7,000 Pounds during your next mortgage!

(The AMF is yet to be commercially available at the time of this Posting.  This mortgage product is being developed exclusively by KL Mortgage Enterprises, LLC.)

In the myriad of mortgage products available to the U.K. home shopper, the AMF clearly stands out.  Benefits include:

• Pay down your loan principal FASTER than the other conventional mortgages- with typically little or NO additional costs, payments, or fees.
• Under normal market conditions (with a 250,000 loan amount), gain an extra 7,000+ pounds of principal paydown after just 7 years.
• Monthly payments do not fluctuate as much as the conventional UK tracker & variable mortgage products.
• Very competitive & comparable interest rates and lending costs.
• Better prepayments terms than most typical fixed mortgages.

KLME is now working with established mortgage advisors and bankers in order to successfully bring the AMF to the UK market.  Check back to this site frequently for updated information and product availability.  For more details on the AMF, please contact KLME’s British representative at:

amfinfo@blueyonder.co.uk

Or, please contact our main corporate office in the USA, at:

amfinfo@comcast.net

(978) 764-8470

Introducing the Alternative Mortgage Fund (”AMF”)

(soon to be available- developed exclusively by KL Mortgage Enterprises, LLC)

A new, BETTER mortgage alternative!  Benefits include-

• Pay down your loan principal faster than conventional 30 year fixed-rate mortgages- with typically NO additional costs, payments, or fees
• Principal paydown rate is similar to the Bi-Weekly Payment Plans- except without the necessary EXTRA MONTHLY PAYMENT that the Bi-Weekly is based on
• Under normal market conditions (with a $250K loan amount), gain an extra $17,000+ of principal paydown after just 7 years
• Very competitive & comparable interest rates, points, and closing costs
• NO balloon payments or prepayment penalties

The AMF is a non-conforming mortgage which is not yet available commercially.  KLME is currently in process of partnering with established mortgage brokers and bankers in order to successfully bring the AMF to the market. 

Check back to this website for further details, or for more information on this innovative mortgage, please contact KLME at:

amfinfo@comcast.net

(978) 764-8470

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