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Looking for the correct mortgage deal may be a time consuming task. Access to the internet could end up speed up the mortgage application process in the majority of cases. These days a great number of mortgage providers have an online presence and can present their benefits and rates over the internet. You can take advantage of the internet to speak to mortgage providers to ask for advice. The mortgage provider's agent will be able to assist you on an appropriate
What is a mortgage?
In basic terms a mortgage is a lump sum received to acquire a property, repaid over a set amount of time. The ordinary repayment term of a mortgage advance is between 20 and 25 years but it can be reduced to go with your individual situation.
A mortgage is made up of two clear elements : the principal (the amount received) and the interest (the fee charged by the mortgage lender for the advantage of taking out the lump sum borrowed).
There are fundamentally two types of mortgage loans :
A repayment mortgage repays both the principal and the interest during the life of the mortgage. Providing the exact monthly repayments are made at the correct time, a repayment mortgage assures that the whole of the mortgage amount will be paid at the closing of the mortgage term.
An interest only mortgage pays back only the interest on the mortgage taken out - for this reason the "interest only" name. Since the mortgage capital is not included in this kind of mortgage, you need to make your own plan to guarantee the principal is returned before or at the end of the mortgage agreed period. Popular methods of arranging this type of mortgage loan are by means of investments or savings products such as endowment policies or otherwise the principal can be paid by the resale of the property.
Knowing which kind of mortgage repayment approach is most appropriated is subject to your individual employment and financial situation.
With a repayment mortgage you benefit from the certitude that your property will be fully repaid at the end of the mortgage. Yet in the early years of your loan the greater part of your repayments will be payment of interest rather than the principal amount. If your plan is to move property on a regular basis or re-mortgage to get a better mortgage deal, you may find that a small amount of the capital gets paid off.
With an interest-only mortgage product, if your savings or investments vehicles perform better that imagined, you could pay off the capital quicker than expected, decreasing the borrowing terms of the loan and as a benefit, reducing the amount of interest paid to the lender. Ahead of deciding about the style of mortgage which is best for you, we advise that you contact a fully trained financial advisor.
How much can I obtain from a mortgage lender?
Whereas there are no exact guidelines as to what amount a mortgage lender is ready to lend, usually if you plan to aquire a real estate property for yourself as your main place of residence, mortgage providers may be willing to lend you around up to x 5 your gross annual revenue, based on your personal situation, such as employment status, your credit history ,etc…
Before you proceed with an application for a mortgage you should to work on a budget listing the amount you take home and your bills such as utility bills, phone and mobile bills, food shopping, current, personal loan repayments and any other costs you get each month. Within this estimate the cost of a new home (including different runing cost / bills and council tax). Make sure to add insurance premiums in your budget life insurance or repayment protection. This method will give you a good idea of the amount you might be able to sensibly afford
What amount of deposit do I need?
The vast majority of lenders will give you a maximum of 90% of the value of the house, meaning you need a ten percent deposit. Nevertheless a small number of lenders will give you up to 100% but this type of mortgage is less advantageous and is in some ways an expensive method to get a mortgage loan. A large deposit of more than 15%, will present you with a competive choice of mortgage solutions with a more competitive rate
Taking a mortgage loan with a poor credit history
A small group of mortgage providers provide mortgages for borrowers suffering from a low credit file (CCJs) These mortgage lenders are called subprime lending companies. They will review any adverse credit mortgage application (CCJs, defaults). Based on the bigger risk with providing a mortgage to people with low credit, these subprime lenders will charge a top level of interest rate on the advance.
With an impaired credit history (arrears, ccj's) you need to reflect carefully regarding the cost of applying for a subprime mortgage loan. You need a superior level of deposit of a minimum of 20% or more.
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