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Searching for the correct mortgage deal can be a difficult task. Access to the internet could facilitate the mortgage application process in most cases. Nowadays most lenders have an online presence and can promote their best mortgage offers over the internet. Use the internet to contact lenders to get assistance. The mortgage provider's representative will be able to advise you on the most suitable
A basic understanding of a mortgage
In simple terms a mortgage is a monetary lump sum borrowed to purchase a home, to be repaid over a defined loan term. The normal repayment term of a mortgage loan is 25 years however it can be revised to match your individual circumstances.
A mortgage is composed of two defined elements : the principal (the amount given) and the interest (the amount charged by the mortgage company for the benefit of getting the amount borrowed).
There are in actual fact two categories of mortgages :
A repayment mortgage repays both the capital and the interest of the mortgage over the agreed term of the mortgage. Providing the agreed monthly repayments are met regulary and on time, a repayment mortgage warrants that the whole of the mortgage loan will be repaid at the end of the loan agreed duration.
An interest only mortgage repays only the interest on the lump sum given - hence the "interest only" name. As the capital is not regulary repaid in this kind of mortgage loan, you need to make your own plan to ensure the principal is paid back before or at the end of the mortgage agreed period. Usual approaches of providing this type of mortgage capital are via savings or investments products for instance endowment plans or instead the principal may be reimbursed by the sale of other assets.
Establishing which type of mortgage loan repayment method is right for you can be influenced by your personal financial situation.
With a repayment mortgage you benefit from the certitude that your property will be fully reimbursed at the end. Still in the early years of your mortgage the bulk of your monthly repayments will end up being payment of interest rather than the principal amount. If your plan is to move place of residence repeatedly or remortgage to reduce the interest rate, you can find out that little of the capital loan is repaid.
With an interest-only mortgage product, if your savings vehicles perform well, you can reimburse the principal faster than projected, reducing the duration of mortgage and making a great saving. Prior to reaching a decision about the kind of mortgage product which is best for you, we encourage that you get in touch with a fully qualified financial advisor.
What amount can you take out from a mortgage lender?
Whilst there are no defined definitions as to what level a mortgage company is ready to lend, generally if you plan to purchase a property for you and your family, mortgage companies may lend you around up to x 5 your joint gross annual revenue, depending on your personal situation, such as employment status, your credit rating ,etc…
Before you proceed with an application to get a mortgage you should to make your accounts featuring the amount you take home and your monthly spending such as utility bills, telecom bills, food and clothing costs, existing, personal loan repayments and any other costs you get every month. As part of this account for the cost of a new house (including new utility bills and taxes). Don't forget to add insurances in your plan house insurance and repayment protection. Your accounts will provide you with a reasonable idea of the mortgage repayment you have the capacity to realistically afford
How much deposit do mortgage lenders require ?
The best part of mortgage companies will loan you up to 90% of the value of your intended property, meaning you will be required to have a 10% deposit. Nevertheless some mortgage lenders will loan you a 100% mortgage but this type of mortgage is less advantageous and is in some ways an expensive method to get a mortgage. A bigger deposit of above 25%, will present you with a greater variety of mortgage prospects with the most attractive interest rates
Obtaining a mortgage with a bad credit history
A small group of lenders offer lending for people with a bad credit rating (CCJs, defaults) These mortgage companies are called sub prime lending companies. They will review any bad credit mortgage applicant (CCJs, defaults). With the higher level of risk with offering a mortgage to applicants with poor credit, these subprime lenders request a top level of interest rate on the mortgage.
With a poor credit rating (defaults, arrears, ccj's) you have to think cautiously concerning the expense of getting a poor credit loan. You need a higher level of deposit of a minimum of 25% and above.
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