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Looking for the right mortgage company can prove to be a difficult task. The internet can improve the mortgage process in the majority of cases. Nowadays the vast majority of mortgage brokers have a web site and can display their typical mortgage rates over the web. You can use the internet to speak to mortgage lenders to compare mortgage products. The mortgage lender's agent will be able to assist you on a suitable
What is a mortgage?
In plain terms a mortgage product is a monetary lump sum arranged to pay for a house, repaid over an established term. The general repayment term of a mortgage is 25 years however it can be reduced to match your individual situation.
A mortgage is made up of two clear parts : the principal (the amount borrowed) and the interest (the fee charged by the mortgage lender for the advantage of receiving the lump sum borrowed).
There are in essence two types of mortgages :
A repayment mortgage loan pays off both the capital and the interest of the loan over the duration of the mortgage. As long as the agreed monthly repayments are made in good time, a repayment mortgage loan warrants that the totality of the amount borrowed will be covered at the finishing point of the mortgage agreed term.
An interest only mortgage pays off only the interest on the amount given - for this reason the "interest only" name. As the mortgage capital is not repaid monthly in this sort of mortgage product, you are responsible to make your own plan to ensure the capital is reimbursed before or at the end of the mortgage term. Standard approaches of arranging this kind of mortgage capital are with savings plans such as pension policies or otherwise the capital could be repaid by an inheritance.
Knowing which kind of mortgage loan repayment method is the best for you can be determined by your individual financial situation.
With a repayment mortgage loan you benefit from the peace of mind that your home will be totally reimbursed at the end. However, in the first few years of your mortgage the greater part of your mortgage payments will in fact be payment of interest rather than the principal amount. If your plan is to move place of residence regulary or re-mortgage to reduce the interest rate, you can realise that a small amount of the capital is reimbursed.
With an interest-only mortgage product, if your investment plans outperform your mortgage rates, you can repay the capital quicker than planned, lessening the term of mortgage and as a benefit, reducing the amount of interest paid to the lender. Prior to making a decision about the sort of mortgage product which is best for you, we recommend that you get in touch with an independent mortgage advisor.
How much can we borrow from a mortgage lender?
In spite of the fact that there are no exact rules as to what ceiling a provider is willing to lend, in general if you plan to aquire a real estate property for yourself as your main place of residence, mortgage providers could lend about x 3.5 your annual income, depending on your personal circumstances, such as employment status, your credit rating ,etc…
Before you apply to get a loan you should to draw up your accounts listing the amount you take home and your monthly expenses such as gas and electricity bills, telephone bills, transport costs, current, credit card repayments and any ofther bills you get every month. As part of this estimate the cost of a new property (including different runing cost / bills and council tax). Make sure to add insurance premiums in your plan buildings insurance and repayment protection insurance. This approach will give you a better idea of the amount you could sensibly afford
What amount of mortgage deposit do mortgage lenders require ?
The vast majority of building societies will advance you up to 90% of the value of your prospective home, meaning you will be required to provide a 10% deposit. On the other hand, some mortgage companies will offer you a 100% mortgage but this sort of lending is less competitive and is in some cases an expensive method to get a loan. A decent deposit of above 15%, will give you access to a wider range of mortgage solutions with the most attractive mortgage rates
Applying for a mortgage loan with a bad credit record
A small group of mortgage providers provide mortgages for people with a bad credit history (CCJs, defaults, arrears) These mortgage companies are called sub-prime lending companies. They will consider any low credit mortgage applicant (default, arrears, ccj's). Based on the larger level of risk involved in offering a mortgage to applicants with bad credit, these sub-prime lenders require an elevated level of APR on the advance.
With an impaired credit record (ccj's / arrears) you should reflect cautiously concerning the expense of applying for a subprime mortgage loan. You will be required to have a greater deposit of a minimum of 15 percent or more.
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