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Looking for a suitable mortgage lender might be a difficult experience. The internet will end up facilitate the application process in the majority of cases. At the present time a great number of lenders have an online web site and can display their benefits and rates over the internet. You can use the internet to get through to mortgage lenders to request a personalised quote. The mortgage broker's representative should be able to advise you on a suitable
What is a mortgage?
In plain terms a mortgage product is a monetary lump sum borrowed to purchase a home, paid back over a defined period. The standard repayment period of a mortgage loan is around 25 years but it can be revised to match your circumstances.
A mortgage is composed of two definite components : the principal (the lump sum given) and the interest (the fee charged by the mortgage company for the advantage of taking out the principal amount).
There are in effect two types of mortgages :
A repayment mortgage repays both the principal and the interest of the mortgage during the term of the mortgage. Assuming that the defined monthly repayments are met on time, a repayment mortgage guarantees that the whole of the mortgage debt will be repaid at the completion of the loan period.
An interest only mortgage pays back only the interest on the monetary advance taken out - for this reason the "interest only" name. Due to the fact the capital is not repaid in this sort of mortgage, you are responsible to make your own plan to assure the capital is paid before or at the end of the mortgage term. Standard methods of managing this sort of mortgage loan are by the use of savings or investments plans such as ISAs or alternatively the principal could be paid by the resale of other assets.
Establishing which type of mortgage loan repayment method is most appropriated is determined by your personal financial and employement situation.
With a repayment mortgage product you have the certitude that the property will be fully repaid at the end of the loan. Yet in the early stages of your loan the best part of your repayments shall be payment of interest rather than capital. If your plan is to move home regulary or re-mortgage to get more flexibility, you can discover that little of the capital is reimbursed.
With an interest-only mortgage, if your investment vehicles perform better than anticipated, you can pay off the capital faster than projected, slashing the borrowing terms of mortgage and making a great saving. Before deciding about the style of mortgage product which is best for you, we recommend that you get in touch with a fully trained financial advisor.
What amount can you obtain from a mortgage lender?
While there are no defined rules as to what ceiling a mortgage company is prepared to lend, normally if you plan to purchase a house for you and your family as your principal residence, lenders could offer you an advance of around a maximum of 5 times your joint gross annual salaries, depending on your individual situation, such as employment status, your current level of borrowing ,etc…
Before you enter an agreement for a mortgage you are advised to work on your accounts outlining your monthly income and your monthly spending such as electricity bills, phone and mobile bills, food and clothing costs, existing, loan repayments and any ofther bills you have every month. As part of this account for the cost of a new property (including different utility bills and council tax). Don't forget to add all insurances in your plan contents insurance or mortgage insurance. Your accounts will provide you with a better idea of the amount you are able to really afford
What amount of deposit do mortgage lenders want ?
The greater part of building societies will grant you up to 90% of the purchase value of your intended property, meaning you will need a 10% deposit. However, a small number of lenders will give you a 100% mortgage but this kind of loan is less competitive and is in some instances an expensive solution to get a mortgage. A decent deposit of more than 25%, will give you access to a competive choice of mortgage solutions with a more attractive mortgage interest rate
Getting a mortgage loan with a bad credit record
A minority of mortgage lenders can offer mortgages for applicants with a poor credit record (CCJs, defaults, arrears) These mortgage providers are called sub prime lending companies. They will consider any low credit applicant (arrears, ccj's). With the higher level of risk involved in offering a mortgage to applicants with poor credit, these subprime mortgage lenders require a top level of APR on the advance.
With a poor credit history (ccj's / arrears) you need to reflect cautiously concerning the cost of applying for a poor credit loan. You will be required to have a higher level of deposit of at least 25% and above.
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