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Getting a good mortgage deal may prove to be a challenging experience. Access to the web can improve the mortgage process in the majority of cases. In this day and age a great number of mortgage providers have a web site and can present their benefits and rates over the web. You can use the world wide web to get through to mortgage companies to compare mortgage products. The mortgage company's agent should be able to help you on the best
What is a mortgage?
In plain terms a mortgage product is a personal loan borrowed to purchase a house, to be repaid over a specified amount of time. The usual repayment term of a mortgage is 25 years however it can be modified to reflect your personal situation.
A mortgage is made up of two distinct parts : the principal (the lump sum borrowed) and the interest (the annual fee charged by the mortgage lender for the advantage of taking out the amount borrowed).
There are in effect two categories of mortgage products :
A repayment mortgage pays back both the capital and the interest during the term of the mortgage. If the defined monthly repayments are met on time, a repayment mortgage loan promises that the full amount of the amount borrowed will be cleared at the closing stage of the loan period.
An interest only mortgage pays off only the interest on the monetary advance taken out - hence the "interest only" name. Since the principal mortgage amount is not repaid monthly in this type of mortgage, you will need to make your own arrangements to ensure the capital is covered before or at the end of the mortgage agreed period. Popular approaches of organising this type of mortgage capital are through savings or investments products such as pension plans or alternatively the principal may be paid by the resale of the house.
Determining which type of mortgage loan repayment approach is most suited to you is governed by your personal employment and financial situation.
With a repayment mortgage product you have the guarantee that your home will be fully repaid at the end of the mortgage. However, at the beginning of your mortgage the bulk of your monthly repayments shall be payment of interest rather than the principal amount. If you plan to move home regulary or re-mortgage to benefit from a better interest rate, you can realise that little of the capital amount gets paid back.
With an interest-only mortgage loan, if your savings or investments plans perform better than anticipated, you can repay the principal quicker than projected, reducing the duration of mortgage and making a great saving. Ahead of making a decision about the type of mortgage product which is best for you, we encourage that you get in touch with a qualified mortgage advisor.
How much can we receive from a mortgage lender?
Whilst there are no exact definitions as to what level a provider is willing to lend, in general if you want to purchase a property for you and your family as your principal residence, mortgage companies could offer you an advance of about a maximum of x 5 your joint gross annual salaries, based on your individual situation, such as employment status, your credit rating ,etc…
Before you proceed with an application to take a mortgage you should to make a budget detailing your income and your monthly expenses such as gas and electricity bills, phone and mobile bills, food and clothing costs, current, personal loan repayments and any ofther bills you have every month. As part of this account for the monthly cost of your new home (including different runing cost / bills and council tax). Make sure to include insurances in your plan buildings insurance and / or repayment protection. Your budget will give you a fair idea of the mortgage you are able to sensibly afford
What amount of deposit do I need?
Most building societies will give you a maximum of 90 percent of the purchase price of the house, meaning you will need a 10% deposit. On the other hand, a minority of mortgage providers will grant you up to 100% but this type of loan is less competitive and is in some instances an expensive method to get a mortgage. A bigger deposit of 15% or more, will provide you a bigger variety of mortgage opportunities with a more attractive mortgage rate
Applying for a mortgage with a bad credit record
A minority of mortgage companies provide mortgages for borrowers suffering from a adverse credit rating (CCJs, defaults) These lenders are called sub-prime lending companies. They will review any impaired credit applicant (CCJs, defaults). Based on the larger level of risk with lending to applicants with adverse credit, these sub prime lenders demand an elevated level of interest (APR) on the mortgage.
With a poor credit history (CCJs, defaults, arrears) you need to consider cautiously about the cost of applying for a sub-prime loan. You will be required to have a larger deposit of in some situations 25percent or more.
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