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- Mortgages & Loans
Dont get mortgage dizzy
What is a mortgage..?
Basically a mortgage is security for a loan which the lender ie....makes to the borrower. A mortgage in itself is not a debt its the lenders security for the amount of debt. In other words you borrow the money as a loan and the bank issues you a mortgage as a security for the bank. Normally the mortgage lender gives you this loan on the terms that the interest will be returned to the owner when the mortgage has been satisfied and payed off. You can only get a mortgage on real estate property. The person that gives you this loan is called the mortgagee....bet you didnt know that.
Types of mortgage
I am only going to talk about the 3 main mortgages as the list is huge. It can be difficult to know which mortgage is suitable for you. Most lenders or banks can offer you mortgages that belong to these categories:
1: FIXED RATE MORTGAGE- A fixed rate mortgage is the most popular and most common of the three types of mortgage. You take the mortgage with the bank and you pay a fixed repayment amount for a fixed period of time. A lot of people choose a 30 year fixed mortgage because the monthly payments are low. If you wanted too though you can get a 5, 10 or 15 year fixed mortgage as this allows you too pay it of in a shorter length of time. One disadvantage of a 30year fixed rate mortgage is you have to pay more.
2: CONVERTIBLE LOANS- These type of loans are getting popular because it allows you too keep your mortgage loan options open thus allowing more flexibility which means if interest rates are too high you can turn to a fixed rate mortgage. One type of a convertable loan is a BALLOON LOAN which allows the buyer too repay small amounts back over a 5 to 7 year period. At the end of this period you have to pay the loan back in one lump sum this is ideal for investors or property dealers.
3: SPECIAL MORTGAGE LOANS- Only a certain group of people are being offered these..for instance first time home buyers or people with bad credit. If you want to find out if you qualify for any types of these loans the best thing to do is talk to a proffesional mortgage consultant before you decide to take any of these up.
The buy to let explosion
In 1990 a new scheme came out called buy to let and fastly became popular. The reason behind this was that the government owned most houses and buy to let gave people the righrs to buy a property they were living in if it was owned by the government. I dont know much on buy to let rates but if you need to know there is a mortgage calculator online which you might find useful.
How the credit crunch may of affected your chances
The crunch has hit britain and america hard mostly due to too many people trying to buy there homes and then not being able to afford back repayments which then has resulted in foreclosure and repossesion rates hitting a sky high. Nowadays mortgage lenders find it hard to trust or lend you a loan because of the economy collapsing. I personally blame the greedy bankers taking too much money for their bonusses. But hey what can you do or say thats going to fix that.
THINK TWICE.....! My last words are to make sure you know what your getting yourself into before you decide on a mortgage as there is lots of pitfalls in this game. You will need lawyers and all sorts of proffesional help before you can get up and running. Also you need to think about those mortgage rates..are they on the up or down. Whatever you decide dont make a decision lightly as it could be a very costly mistake. On the upnote if you do get a mortgage....enjoy.
My list of the top 5 mortgage lenders and rates
1: HALIFAX BUILDING SOCIETY 21%
2: ABBEY NATIONAL 28%
3: NATIONWIDE 20%
4: NORTHERN ROCK 15%
5: WOOLWICH BUILDING SOCIETY 11%
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