1% Mortgage Loans

About 1% Mortgage Loans… What Are The Challenges You Can Face?

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While there are several different types of 1% mortgage loans, there are only two main keys to winning 1% mortgages.

  • The first key is to make sure the loan is set up correctly from the start.
  • The second is to make sure you use the loan correctly to get the maximum benefit.

First, let’s talk about how loans work. Then we get into how to arrange the loan properly so that you can reap the financial benefits that mortgage loans have to offer.

First of all, 1% of mortgage loans have repayment options. Each month when you get your mortgage statement, you’ll have the option to make 30-year fixed payments, 15-year fixed payments, interest-only payments, and a 1% minimum payment.

Although you are given several payment options, we recommend choosing a minimum payment of only 1%.


Because if you want 30 years of fixed payments, 15 years of fixed payments, or interest only, you are better off getting this type of loan. These payments are usually higher with mortgage loan repayment options.

If you choose 1% as a minimum payment, your first benefit is a significant reduction in monthly payments. Your mortgage payment will likely be cut in half. Of course, this is the first feature that attracts most homeowners.

To increase the effectiveness of choosing a minimum return of 1%, you should keep what you save. For example, let’s say you refinance your home with a 1% mortgage, pay off all of your credit cards, and lower your monthly payments by $1,000 a month.

Now, if you keep $1,000 a month for yourself instead of giving it to your creditors, you’ll have $60,000 in cash at the end of five years — and that’s a zero percent return.

Here is the second advantage of choosing the 1% minimum payment option:

  • tax savings

If you only make interest payments, your mortgage balance will remain the same. If you pay a minimum of 1%, you are actually paying less than interest alone. Therefore, you create deferred interest that increases your mortgage balance each month.

Before you panic, remember that deferred interest is mortgage interest and is therefore tax-deductible.

Let’s say the value of your home increases to $2,000 per month. A 1% mortgage loan will allow you to take a small portion of that estimate, say $500 per month, and turn it into a tax deduction.

So you take a small portion of your capital each month and turn it into a tax deduction. If you don’t, all of your rewards will be locked into your capital.

Equity is great and it is definitely one of the many benefits of homeownership. But investing in equity will give you zero percent returns.

No one is going to cut a check for you every month against the equity in your home. In fact, if you want to get equity from your home, you have to sell your home or take out a loan. And you are better qualified or you will not be able to get a loan.

So why not take a small portion of your balance each month and turn it into a tax deduction and at the same time save you $1,000 a month? You will still have a lot of equity but with a 1% mortgage, you will have cash and equity.

If you do this for a long time, you will come out more financially advanced than if you took out a fixed or interest-only 30-year mortgage loan.

By the way, if deferred interest is a concern, try making biweekly payments. Making biweekly payments will reduce, and in some cases eliminate, deferred interest entirely. This means that your mortgage balance will not accumulate.

How to arrange a loan correctly:

1) The 1% repayment option for this loan is only available for the first five years. But you can actually hold one of these loans for 30 or 40 years. If you choose a 40-year loan, your monthly payments will be lower but the repayment options will not last for five years. The name of the game is to keep the 1% payment for as long as possible. So get an amortization of 30 years.

2) The 30-year, 15-year, and interest-only payments are linked to the index. Choose a slower-moving indicator such as MTA (Monthly Treasury Average) over a faster-moving indicator such as Libor (London Interbank Offered Rate).

So how can you lose a mortgage with 1%?

  • The answer – is consumption.

If the value of homes in your area drops rapidly, deferring interest could turn your home upside down.

But if your area has

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