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A Quick Guide To Mortgages
By: Aldrich Chappel
Buying a dream home is one of the major milestones of any individual’s life. The
price of real estate is increasing day by day. The designer and flashy homes,
which appeal us the most, are beyond the financial capabilities of a lot of
individuals. However, this fact should not deter us from fulfilling such a
dream. With widely available low interest mortgages, now even a common man can
own the residence of his choice.
Starting with the basics, mortgage is a type of loan that any individual can
take, in order to buy a home or a property. The property being bought is used as
collateral to the loan, this often means that if the repayments schedule of the
mortgage is not complied with fully, the lender can take the possession of your
property, and sell it to recover his amount.
Any mortgage deal whether it is the first one, or a remortgaging effort,
requires a lot of hard work. The best advice given by any lender is cleverly
disguised to suit his interest the most. So, the first thing that any borrower
should do is to take a closer look at any lender’s advice and compare it with
other offers floating in the market.
Choosing the mortgage that is right for you and getting the best deal, involves
taking a lot of decisions. The two main things that require the greatest
attention are the interest rates charged for the mortgage and the repayment
method of the mortgage.
The rate of interest to be paid for mortgages are determined by the base rates
prevailing in the loan market. A borrower should go for a low interest mortgage,
since the lower the interest rate; the lower will be the monthly repayment. At
any given point of time the borrower might get hundreds of offer for mortgage.
Each lender has different conditions and charges. The borrower is advised not to
succumb to any offer with cheap initial interest rates; instead he or she should
look at all the features of mortgage before accepting any deal.
As for the repayment method the borrower has two options – a repayment mortgage
or an interest only mortgage.
In a repayment mortgage, the borrower has to pay off the amount in equally
spaced installments. The installments gradually recover the principal amount
coupled with the interest from the borrower. Thus, the mortgage is fully paid by
the end of agreed term.
In an interest only mortgage only the interest is charged in the installments.
The principal amount is not included in the monthly repayments. The arrangement
to repay the principal amount is made by other means, usually at the end of the
mortgage term or as agreed between the two parties. The mortgage amount is
guaranteed by some investment in shares, or stock. The borrower has to make sure
that his investment grows, so as to pay the mortgage by the end of agreed term.
Most lenders will offer mortgage up to 95% of the property's value under
consideration, but the borrower might have to pay a higher lending charge if he
borrows more than 75% of his property value. There are other costs also, which
are essentially involved with a mortgage. The lender might ask you to deposit an
amount upto 3-10% of the asking price of the property. Valuation fees,
solicitor’s fees and higher lending charges also escalate the price of mortgage.
After deciding on a mortgage, the borrower has to apply formally to the lender.
He should take care to fill in all the details carefully. If he feels confused
at any stage he should take the help of a financial advisor, instead of making
wrong assumptions. If everything goes smoothly the borrower will soon receive a
mortgage offer.
About the Author:
Aldrich Chappel has been associated with get-secured-loans,since its
inception.He completed his Masters in Finance from Lancaster University
Management School.To Find Secured loans,loans for homeowners,best secured loans
visit
www.get-secured-loans.co.uk
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