Everything you need to know about mortgages

Everything you need to know about mortgages

What is a Mortgage?

Mortgages are loans from a lender such as a building society or bank to purchase a specific property. You will be charged interest by the lender for the money they lend you, and will have to repay the loan through monthly payments that are required by law. Your home is used as collateral for the amount that you borrow. If you fail to make your mortgage payments, your home could be repossessed. This is called repossession.

Most people need a mortgage to purchase a home. The maximum amount a lender is willing to lend at the moment is 95%. A minimum deposit of 5% is required.

When getting a mortgage, what should I consider?

Mortgages can last up to 40-years. You must consider your ability to pay back the mortgage now and in the future when you purchase a home and take out a loan. What are you expecting your new bills to look like? You need to spend some money on it? You want to expand your family. What is your maximum monthly budget?

We’ve created a budget planner to help you. It will show you how much you should be budgeting for your mortgage payments. Then, you can choose a payment that is comfortable for you and we’ll show you the mortgage term that suits you. Do not panic if the mortgage term ends up being longer than what you had planned. With most mortgages, you can pay more than what is necessary. You may also want to consider reducing the mortgage term when you remortgage.

After paying the house deposit and solicitors fees for your new home you should also consider whether you have sufficient savings to cover at least three month’s expenses. It is your legal responsibility to pay monthly mortgage payments. If you are made redundant, or if you have to pay solicitors fees, do you have enough in savings after paying for the house deposit, solicitors fees, and furnishing your new home, to cover at least three months of outgoings?

Insurances can be purchased to cover your mortgage and replace your income in the event of serious illness or death. You should always let your mortgage lender be aware of any financial difficulties you may have. They can then help you to explore all the available options.

What is the best mortgage loan for me?

The traditional brokers will offer you in-person or telephone appointments. You would typically need to make two appointments for a thorough discussion of all your financial and personal information. Many brokers charge a flat rate for their service, and also make a commission from the mortgage they recommend.

Our advice is free. We have access 50 first-time buyer mortgage lenders as well as thousands of mortgage offers. We are paid commission by the lenders and insurers. Our money is only paid after everything has been completed. This does not affect the deal that you are offered. You can rest assured that our advisers do not receive any commission because they are salaried.

Access to the entire market: If someone has access mortgage products and lenders that are representative of the total market

You can also use comparison websites to compare mortgages. However, a mortgage broker will also have access and be able tell you the best mortgage for your circumstances. Hidden fees or ‘honeytrap mortgages’ can occur. The interest rate may be low, but the fees charged make it not the most cost-effective deal.

You will need to provide details on your budget, savings, property that you want to purchase, and risk tolerance (which will help determine the type of interest rate recommended for you, such as fixed or variable).

Mortgage interest rate: The mortgage lender will charge you an interest rate if you borrow money. This is how they earn money on the loan. For more rateswitcher uk

Fixed Rate: An interest rate that is fixed for a set period of time. If the lender increases their interest rate, you cannot raise yours until a certain time period. This means that if the lender lowers their interest rate, you can’t take advantage of it.

Variable interest rate: With a variable rate, the interest rate can change depending on what your lender decides to charge. You can benefit from lower rates of interest when they are fluctuating downwards. However, when they rise, your mortgage payments will increase. Some mortgages offer a discount on the variable rate.

Tracker Rate: The tracker rate is similar to the variable rate but it does not fluctuate based on lenders’ rates. Instead, the rate follows the Bank of England rates.

What is an agreement in principal or a mortgage on principle?

The estate agent may ask for an mortgage agreement when you begin looking for property. Mortgage in principle is the certificate that a lender gives you to confirm how much money they are willing to lend based on income, outgoings and credit history. While it is not a guarantee of approval, it gives you an idea that your mortgage application should be approved. It also shows that you’re serious about purchasing and are ready to begin the process.

What is a good term for a mortgage?

The mortgage term is how many years you and your mortgage lender agreed to repay the loan. The longest available mortgage term is 40 years. Your best mortgage term will depend on your monthly payment and total amount borrowed more info

You should create a realistic monthly budget to determine how much you can afford. Some people prioritize keeping their monthly payments as low as possible to pay for other obligations, which may mean that a longer term mortgage suits them better. Remember that the longer your mortgage term, the higher the interest rate you’ll pay because you are paying back your debt at a slower pace.


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