Online Financial Tips

With all the uncertainty in the financial market right now, the old saying of “Cash is King” will definitely pop up frequently in your daily dealings.

If cash is really king right now, are you going to park your liquidity in a savings account then? You could do that but with the low interest rates, it might not be a good idea to put all your eggs in the same basket. You could try investing in money market. With an average of about 1% – 2%, it certainly beats putting it into a savings account. Although money market’s rate is definitely higher than savings account or a fixed deposit, the risk is higher too. A money market also does not ensure the preservation of the principle investment amount. Both tools are worth considering when you want to diversify. Are there any more tools to consider?

You can consider having a current linked mortgage if you are a high liquidity type of person right now. A current linked mortgage links both mortgage and a current account together and they both yield the same interest rates. It is worth taking a look at current linked mortgages that have interest rates that does not deviate much from the main stream mortgages. The interest from a current linked account can better a money market by as much as 100 to 150 basis points. Unlike a money market mutual fund, you do not have to make subsequent minimum investments, pay management fees or sales charges. A current account also guarantees your principle amount as well.

Others may argue that given a high liquidity position, I could just pay off the whole mortgage at one go. Why should I even consider such a large liquidity position? First of all, having cash allows you to source for investments with returns higher than your mortgage rate or inflation rate, whichever is higher. Secondly, with Singapore’s inflation rate at about 6% – 7%, and your mortgage {if effectively monitored} having an interest of about 2% – 3%, the cost of buying your house actually decreases over the years.

Current linked mortgages are definitely worth considering when the market is not as rosy and you cannot find a better place to park your money. They are instruments that are suitable for the sophisticated investor who monitors and adjusts his investment position periodically. You can also consider it if you have a dedicated advisor or private banker who attends to your financial needs constantly.

Talk to an advisor to find out about the different types of current linked available. Current linked is not a very widely advertised product as its market is not very well developed yet. So far only one local Singaporean bank offers this type of product. Ask your advisor to introduce to you some of the better current linked in the market as he or she may be more familiar with these types of products.

Mortgages provide for the repayment of the loan on a specified date. The effect of failure to redeem on the due date meant that the legal right of the mortgagor to extinguish the mortgagee’s rights had gone forever, and in addition, the mortgagee could sue for repayment of the loan. This did not appeal to equity, therefore the courts evolved a rule that the mortgagor could redeem the mortgage by paying back the mortgage debt and all interest on it at any time before the mortgagee sold or foreclosed. This has had a major impact on new home owners versus the frequency of Jamaica home rentals.

This right of the mortgagor to redeem after the due date is his equitable right to redeem. But from the start of the mortgage, the mortgagor has been possessed of a species of equitable interest known as the equity of redemption.

This interest is a bundle of equitable rights, including the equitable right to redeem.

Law of mortgages

A mortgage is a form of security for the repayment of money lent. Mortgagor (Borrower) is the party who conveys the property by way of security. Mortgagee is the lender who obtains an interest in the property. The importance of the mortgage is that if the borrower fails to repay the mortgage debt, the lender has the powers under the mortgage, of realizing the value of the mortgaged property and repaying himself out of the proceeds.

Equity of Redemption – suppose a house worth $100,000 was mortgaged to secure a loan of 25,000. Obviously, the mortgagor still has asset worth $75,000. This is an equitable estate – the equity of redemption. Without paying off the mortgage, the borrower can sell, lease or devise his interest. This is in fact transferring the equity of redemption. He can also mortgage it, so that there may be a number of mortgages affecting the property.

The mortgagor has two rights to redeem his property:

1) The contractual right on the date specified in the deed, and,

2) The equitable right to redeem, on payment of principal of the loan, the accrued interest along with fees and loan costs, and establishing proper notice to the mortgagee. This does not take effect until and unless the contractual right (the mortgagors prerogative) to redeem, on the date fixed in the mortgage has passed. This process of curtailing the equitable right to redeem and so leaving the mortgagee with a fee simple is known as foreclosure.

Foreclosure

A foreclosure puts an end to the equitable right to redeem and so destroys the equity of redemption. It therefore follows that the right to foreclosure cannot arise until the legal date for redemption has passed; for only then does the equitable right – which is the victim in a foreclosure action – arise. An action may apparently commence immediately the legal date has passed, but in practice however, an action for foreclosure is not usually begun except after such default as might justify a sale. While the matter of frequency is not a grave concern it does affect Jamaica home rentals positively, so rent income increases for some property investors.

The effect of a foreclosure is that it vests in the mortgagee the fee simple (or the whole of the mortgagor’s estate) and it also extinguishes the mortgagee’s mortgage term and other subsequent mortgages. But prior mortgages are not affected by the foreclosure: they still subsist and the result is that the foreclosing mortgagee will have to redeem these prior mortgages if he wishes to be absolute master of the property. For example, suppose there are four mortgages of the fee simple in the property which were made to A, B, C and D in that order.

If it forecloses, then the unencumbered fee simple vests in him because all the subsequent mortgagees, that is, those of B, C and D are extinguished. But if C forecloses, he only extinguishes D’s mortgage, those of A and B remain and he must redeem these mortgages by paying off A and B if he wishes to have the property unencumbered. Of course, in any foreclosure action by a mortgagee, subsequent mortgage must be made parties to the action and are also given the opportunity to redeem the mortgage of the foreclosing mortgagee. Thus, in our example, when A was foreclosing, B, C or D could pay off A and redeem A’s mortgage, thus preventing their own mortgage from becoming extinguished.

This principle has given rise to the saying, “redeem up, and foreclose down”. Therefore, any mortgagee can foreclose in an action to recover land and action must be brought within twelve years from the date upon which the right of recovery accrues.

Jamaica real estate agents with house rentals have identified that in recent times they have seen a growing number of listings coming from financial institutions as they are unable to divest foreclosed properties.

How Internet Banking Works

Internet banking works much like traditional banking. The primary difference is you are accessing your account and information, making payments and reconciling statements using your computer rather than paper or the phone to complete transactions. Instead of going down to your local branch office when you bank online you can accomplish multiple tasks at once with the click of a button.

Online banking is rapidly becoming more and more popular as consumers recognize the advantages online banking has to offer. For one most banks charge fewer fees if you take advantage of their online banking services. You can also stop receiving paper statements if you like in many cases and conduct 95% of your business over the Web when you take advantage of Internet banking.

What Internet Banks Do

What to Internet Banks do? The same things traditional banks do. They hold onto our money and lend it out to others respectively. The manage loans and help us keep track of our finances. Chances are if you own a bank account at a traditional bank they offer some type of Internet banking or online services. The next time you stop into your branch office you should ask them about online banking. You may find once you start you have no desire to go back to traditional banking.

For those that have a hard time keeping track of paper statements, Internet banking is a life saver. Internet banking is also advantageous for frequent travelers that need to keep a close eye on their finances from abroad.