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Getting a suitable mortgage lender can prove to be a gruelling experience. Access to the web could end up ease the application process in the majority of cases. In this day and age the vast majority of mortgage lenders have an online presence and can present their mortgage offers over the internet. You can take advantage of the web to get through to mortgage intermediaries to get assistance. The lender's advisor will be able to help you on the most suitable
Mortgage basics
In basic terms a mortgage is a personal loan borrowed to acquire a property, to be repaid over a defined amount of time. The usual term of a mortgage advance is 25 years however it can be revised to go with your circumstances.
A mortgage is made up of two noticeable components : the capital (the amount received) and the interest (the fee charged by the mortgage lender for the advantage of receiving the amount borrowed).
There are basically two sorts of mortgage loans :
A repayment mortgage product pays back both the capital and the interest of the loan during the life of the mortgage. Assuming that the defined monthly payments are met regulary and on time, a repayment mortgage guarantees that the full amount of the mortgage amount will be settled at the close of the loan agreed duration.
An interest only mortgage pays back only the interest on the monetary advance received - hence the "interest only" name. As the principal mortgage amount is not reimbursed monthly in this type of mortgage loan, you will need to make your own plan to guarantee the capital is reimbursed before or at the end of the mortgage agreed term. Usual methods of managing this style of mortgage are by means of savings plans for instance pension plans or otherwise the principal can be reimbursed by the resale of the house.
Establishing which type of mortgage loan repayment method is most appropriated is determined by your personal financial situation.
With a repayment mortgage loan you benefit from the certitude that the property will be fully reimbursed at the end. Still in the early years of your loan the best part of your monthly repayments are payment of interest rather than capital. If you plan to move home repeatedly or re-mortgage to get more flexibility, you can realise that a small percentage of the principal is repaid.
With an interest-only mortgage product, if your savings plans perform better that imagined, you can reimburse the capital sooner than planned, slashing the duration of the loan and as a benefit, reducing the amount of interest paid to the lender. Prior to making a decision about the kind of mortgage product which is right for you, we recommend that you speak to a fully qualified financial advisor.
How much can I take out from a mortgage lender?
Even though there are no set definitions as to what ceiling a lender wishes to lend, in general if you want to aquire a property for you and your family as your principal residence, mortgage providers may lend you about a maximum of x 5 your gross annual income, based on your personal circumstances, such as employment status, your credit history ,etc…
Before you take up an application to get a loan you are advised to work on your family budget itemising your income and your bills such as electricity bills, telephone bills, supermarket bills, existing, unsecured loan repayments and any ofther bills you have during the month. As part of this budget for the cost of a new property (including different runing cost / bills and council tax). Don't forget to include all insurances in your plan home insurance and / or mortgage protection insurance. This approach will give you a clear idea of the repayment you can really afford
How much deposit do I need?
The majority of lenders will advance you up to 90% of the purchase price of the house, meaning you will need a ten percent deposit. However, a small group of mortgage providers will lend you up to 100% but this type of mortgage loan is less advantageous and is in some instances an expensive method to get a mortgage. A larger deposit of more than 20%, will provide you a bigger variety of mortgage offers, with a more attractive interest rate
Taking a mortgage with a low credit record
Some mortgage lenders can offer mortgage loans for borrowers suffering from a poor credit record (CCJs, defaults) These mortgage lenders are called sub prime lending companies. They will consider any bad credit application (CCJs, defaults, arrears). Based on the larger level of risk involved in offering a mortgage to people with bad credit, these sub prime mortgage providers request a higher interest rate on the loan.
With a poor credit rating (defaults, arrears, ccj's) you ought to think carefully regarding the cost of applying for a sub prime mortgage loan. You need a larger deposit of at least 25percent or more.
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