A Quick Guide to Mortgages

Buying a dream home is one of the major milestones of any
individual’s life. The price of real estate is increasing day by
day. The designer and flashy homes, which appeal us the most, are
beyond the financial capabilities of a lot of individuals. However,
this fact should not deter us from fulfilling such a dream. With
widely available low interest mortgages, now even a common man can
own the residence of his choice.

Starting with the basics, mortgage is a type of loan that any
individual can take, in order to buy a home or a property. The
property being bought is used as collateral to the loan, this often
means that if the repayments schedule of the mortgage is not
complied with fully, the lender can take the possession of your
property, and sell it to recover his amount.

Any mortgage deal whether it is the first one, or a remortgaging
effort, requires a lot of hard work. The best advice given by any
lender is cleverly disguised to suit his interest the most. So, the
first thing that any borrower should do is to take a closer look at
any lender’s advice and compare it with other offers floating in the
market.
Choosing the mortgage that is right for you and getting the best
deal, involves taking a lot of decisions. The two main things that
require the greatest attention are the interest rates charged for
the mortgage and the repayment method of the mortgage.
The rate of interest to be paid for mortgages are determined by the
base rates prevailing in the loan market. A borrower should go for a
low interest mortgage, since the lower the interest rate; the lower
will be the monthly repayment. At any given point of time the
borrower might get hundreds of offer for mortgage. Each lender has
different conditions and charges. The borrower is advised not to
succumb to any offer with cheap initial interest rates; instead he
or she should look at all the features of mortgage before accepting
any deal.

As for the repayment method the borrower has two options – a
repayment mortgage or an interest only mortgage.
In a repayment
Mortgage
, the borrower has to pay off the amount in equally
spaced installments. The installments gradually recover the
principal amount coupled with the interest from the borrower. Thus,
the mortgage is fully paid by the end of agreed term.
In an interest only mortgage only the interest is charged in the
installments. The principal amount is not included in the monthly
repayments. The arrangement to repay the principal amount is made by
other means, usually at the end of the mortgage term or as agreed
between the two parties. The mortgage amount is guaranteed by some
investment in shares, or stock. The borrower has to make sure that
his investment grows, so as to pay the mortgage by the end of agreed
term.
Most lenders will offer mortgage up to 95% of the property’s value
under consideration, but the borrower might have to pay a higher
lending charge if he borrows more than 75% of his property value.
There are other costs also, which are essentially involved with a
mortgage. The lender might ask you to deposit an amount upto 3-10%
of the asking price of the property. Valuation fees, solicitor’s
fees and higher lending charges also escalate the price of mortgage.

After deciding on a mortgage, the borrower has to apply formally to
the lender. He should take care to fill in all the details
carefully. If he feels confused at any stage he should take the help
of a financial advisor, instead of making wrong assumptions. If
everything goes smoothly the borrower will soon receive a mortgage
offer.

Aldrich Chappel has been associated with get-secured-loans,since its
inception.Having completed his Masters in Finance from Lancaster
University Management School,he undertook to provide useful advice
through his articles that have been found very useful by the
residents of the UK.To Find Secured loans,loans for homeowners,best
secured loans visit http://www.get-secured-loa
ns.co.uk

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