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Finding a suitable mortgage product can prove to be a complex experience. The web will end up facilitate the experience in most cases. Nowadays the vast majority of mortgage brokers have an online representation and can publish their best mortgage offers over the internet. You can make use of the web to speak to lenders to compare mortgage options. The mortgage intermediary's representative will be able to help you on the most suitable
A basic understanding of a mortgage
In simple terms a mortgage product is a personal loan made available to purchase a home, paid back over a defined loan term. The typical repayment period of a mortgage advance is up to 25 years but it can be reduced to match your situation.
A mortgage is made up of two noticeable parts : the principal (the lump sum received) and the interest (the fee charged by the mortgage lender for the advantage of getting the principal amount).
There are in actual fact 2 types of mortgages :
A repayment mortgage pays back both the principal and the interest of the loan over the duration of the mortgage. On the condition that the agreed monthly payments are paid regulary and on time, a repayment mortgage product assures that the full amount of the amount borrowed will be covered at the closing stage of the mortgage term.
An interest only mortgage pays off only the interest on the advance given - therefore the "interest only" name. Since the mortgage capital is not included in this kind of mortgage loan, you must make your own provision to assure the principal is paid back before or at the end of the mortgage agreed duration. Standard approaches of organising the interest-only mortgage product are using savings products such as ISAs or alternatively the principal may be paid by the resale of the house.
Establishing which kind of mortgage repayment method is right for you is governed by your personal financial and employement circumstances.
With a repayment mortgage loan you benefit from the certitude that the property will be fully repaid at the end. Nevertheless at the start of your mortgage the bulk of your mortgage payments shall be payment of interest rather than the principal amount. If you have to move property regulary or re-mortgage to secure a better mortgage rate, you can find out that little of the capital loan gets paid back.
With an interest-only mortgage, if your investments or savings vehicles perform better that imagined, you could repay the capital faster than projected, reducing the borrowing terms of the loan and saving money. Prior to making a decision about the sort of mortgage which is best for you, we encourage that you contact a qualified financial advisor.
What amount can we obtain from a mortgage lender?
While there are no set definitions as to what ceiling a mortgage company is willing to lend, generally if you want to purchase a house for you and your family, lenders could lend around a maximum of 5 times your gross annual salary, depending on your individual circumstances, such as number of children you have, your credit history ,etc…
Before you apply to get a loan it is advised to make your budget listing your salary and your outgoings such as gas and electricity bills, phone bills, the cost of your car, current, car loan repayments and any ofther bills you get each month. Within this budget for the monthly cost of your new property (including new runing cost / bills and taxes). Be sure to include insurance premiums in your plan house insurance and repayment protection insurance. Your budget will give you a clear idea of the amount you can afford
How much mortgage deposit do mortgage companies want?
The best part of lenders will give you a maximum of 90% of the value of your intended property, meaning you will be required to provide a 10% deposit. However, a small number of mortgage lenders will grant you up to 100% but this kind of lending is less advantageous and is in some ways a very expensive way to get a loan. A decent deposit of more than 15%, will present you with a greater range of mortgage solutions with a more attractive interest rate
Obtaining a mortgage loan with a poor credit rating
A small group of lenders can arrange mortgage loans for people suffering from a adverse credit rating (arrears, ccj's) These mortgage companies are called subprime lenders. They will review any poor credit application (arrears, ccj's). With the higher risk involved in providing a mortgage to applicants with bad credit, these sub prime lenders request an elevated level of APR on the mortgage loan.
With a poor credit rating (CCJs, defaults, arrears) you should consider cautiously concerning the expense of applying for a sub-prime mortgage loan. You will be required to have a bigger deposit of no less than 15 percent or more.
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