A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is 'secured' against the value of your home until it's paid off. If you can't keep up your repayments the lender can repossess (take back) your home and sell it so they get their money back.
The amount you borrow with your mortgage is known as the capital. Each month, part of your monthly payment will go toward paying off that principal, or mortgage balance, and part will go toward interest on the loan. Interest is what the lender charges you for lending you money.
Not only do you need to consider which mortgage is most suitable for your current needs and circumstances, you also need to think about which interest rate options are most likely to suit your needs. This section has information on the various types of mortgage product which are available.
Remortgaging means switching your mortgage to another deal with another lender without moving property. Some people switch mortgages because it will work out cheaper for them. For example, the introductory discounted interest rate may have finished with your current lender, and you might get a cheaper deal with another lender. Other people remortgage to consolidate their debts.
It is worth noting that a remortgage isn’t always the most suitable option. Sometimes any saving made by securing a cheaper interest rate can be outweighed by the fees incurred in setting up the new mortgage and converting unsecured debt to secured debt may not be in your long term interest.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The main difference between a self build mortgage and a house purchase mortgage is that with a self build mortgage money is released in stages as the build progresses rather than as a single amount.
With a self build mortgage, money is released in stages as the build progresses. Some lenders will lend you money to purchase land - typically 75% of the purchase price or value (whichever is lowest).
After this, the money for the build is released in stages. These stages can be fixed or flexible, depending on the lender, but usually there are six.
There are two methods by which the money can be released during the build – at the end of each stage (known as arrears stage payments) or at the start of each stage (advance stage payments).
These types of mortgages are designed for property investors and private landlords, who do not intend to live in the purchased property but will let property to tenants.
Buying additional property for the purpose of letting it to earn rental income can be risky and complicated since there is no guarantee that house prices will rise nor that rental income will be uninterrupted.
That said, letting a second property to tenants could return respectable financial rewards over the longer term, but it's important to properly consider the risks, as well as rewards, involved in 'Buy to Let' first.
Commercial buy to lets are not regulated by the Financial Conduct Authority (FCA).
The Financial Conduct Authority (FCA) does not regulate buy to let mortgages.
With an Offset Mortgage you can potentially reduce the amount of interest you pay by offsetting a credit balance against the mortgage debt. Some lenders facilitate this through a single account (usually known as a current account mortgage), others offer multiple accounts that allow customers to virtually separate their finances, but whichever the mechanism, the offsetting principle is the same.
Your home may be repossessed if you do not keep up repayments on your mortgage.
People buying their first home often have specific needs when it comes to finding a mortgage. A range of mortgages exists specifically for this market sector.
Buying a home for the first time can be a daunting prospect. There’s so many things to think about – and that’s before you’ve even considered the many mortgage products, rates and lenders to choose from.
A flexible mortgage is a product that can make the traditional British mortgage with its fixed and inflexible payment schedule over a fixed term, such as 25 years.
To help you reduce the stress, here are our Top Tips for First Time Buyers.
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