What You Need To Know About Uk Mortgages
January 23, 2009 by admin
Filed under Mortgage Articles
If you do not have much experience with mortgages, then it would benefit you to educate yourself before deciding whether or not to ********* a current mortgage or to buy a new home. Educating yourself on mortgages in the UK can benefit you when it comes to finding the right mortgage terms for your individual situation.
Types of Mortgages
Endowment Mortgage - This is an interest-only mortgage which involves repayment of capital using an endowment policy at the end of the mortgage’s term.
Interest-Only Mortgage - With an interest-only mortgage, the capital part of the loan is not repaid until the end of the mortgage term.
Investment Backed Mortgage - This is an interest only mortgage which uses a PEP, ISA or some other investment plan to repay the capital at the end of the mortgage’s term.
Pension Mortgage - With a pension mortgage, interest-only mortgages are repaid at retirement using a personal pension scheme’s tax-free cash lump sum.
Repayment Mortgage - This is a method for mortgage repayment which involves paying both the interest and the capital.
Types of Interest Rates
Capped Rates - A Capped rate is similar to a fixed rate, as there is a cap which prevents the interest rate from rising, however the rate can vary as long as it stays below the cap. Some capped rates also have collars, which impose a minimum rate as well as a maximum rate.
Discount Rates - Discount rates exist when there is a significant reduction of the standard variable rate for a set period of time which generally ranges from one to five years.
Fixed Rates - A fixed rate is a rate which remains constant for a set period of time, which is typically two, three, four, five or ten years. The longer-term fixed rates such as five and ten year are generally more expensive and less popular than the shorter term fixed rate loans.
Standard Variable Rate - This is the default variable rate which is offered to every mortgage borrower.
Tracker Rate - This is a variable mortgage rate which is linked to a public interest rate based on a predetermined margin. This rate is commonly linked to the LIBOR for most borrowers.
Variable Rate - this is a rate which varies solely based on the discretion of the lender.
Other Types of Mortgages
Adverse Credit Mortgage - This is a mortgage for borrowers who have credit problems.
Buy to Let Mortgage - this is a mortgage placed on residential property which is let to tenants.
Deferred Interest Mortgage
Foreign Currency Mortgage - Debt is transferred into a foreign currency in order to reduce interest payments and capital based on exchange rate fluctuation.
Flexible Mortgage - This mortgage allows for additional payments of capital without a penalty.
Let and Buy - This mortgage allows you to let your existing property in order to buy a new property.
Non-Status Mortgage - This is a mortgage where the applicant’s income does not come into play.
Offset Mortgage - This is a mortgage where the interest can be reduced by offsetting a credit balance.
Understanding the UK mortgage market and various offers available to you can seem daunting. But do not be put off by researching what is the best type of mortgage for you and your situation.
Types of Mortgages
Endowment Mortgage - This is an interest-only mortgage which involves repayment of capital using an endowment policy at the end of the mortgage’s term.
Interest-Only Mortgage - With an interest-only mortgage, the capital part of the loan is not repaid until the end of the mortgage term.
Investment Backed Mortgage - This is an interest only mortgage which uses a PEP, ISA or some other investment plan to repay the capital at the end of the mortgage’s term.
Pension Mortgage - With a pension mortgage, interest-only mortgages are repaid at retirement using a personal pension scheme’s tax-free cash lump sum.
Repayment Mortgage - This is a method for mortgage repayment which involves paying both the interest and the capital.
Types of Interest Rates
Capped Rates - A Capped rate is similar to a fixed rate, as there is a cap which prevents the interest rate from rising, however the rate can vary as long as it stays below the cap. Some capped rates also have collars, which impose a minimum rate as well as a maximum rate.
Discount Rates - Discount rates exist when there is a significant reduction of the standard variable rate for a set period of time which generally ranges from one to five years.
Fixed Rates - A fixed rate is a rate which remains constant for a set period of time, which is typically two, three, four, five or ten years. The longer-term fixed rates such as five and ten year are generally more expensive and less popular than the shorter term fixed rate loans.
Standard Variable Rate - This is the default variable rate which is offered to every mortgage borrower.
Tracker Rate - This is a variable mortgage rate which is linked to a public interest rate based on a predetermined margin. This rate is commonly linked to the LIBOR for most borrowers.
Variable Rate - this is a rate which varies solely based on the discretion of the lender.
Other Types of Mortgages
Adverse Credit Mortgage - This is a mortgage for borrowers who have credit problems.
Buy to Let Mortgage - this is a mortgage placed on residential property which is let to tenants.
Deferred Interest Mortgage
Foreign Currency Mortgage - Debt is transferred into a foreign currency in order to reduce interest payments and capital based on exchange rate fluctuation.
Flexible Mortgage - This mortgage allows for additional payments of capital without a penalty.
Let and Buy - This mortgage allows you to let your existing property in order to buy a new property.
Non-Status Mortgage - This is a mortgage where the applicant’s income does not come into play.
Offset Mortgage - This is a mortgage where the interest can be reduced by offsetting a credit balance.
Understanding the UK mortgage market and various offers available to you can seem daunting. But do not be put off by researching what is the best type of mortgage for you and your situation.
Mortgage Advice
December 1, 2008 by admin
Filed under Mortgage Articles
Finding independent mortgage advice is not as hard as it sounds. It is very important though if you want to make the right decision about which mortgage is the best one for you.
There are plenty of information about mortgages in the public domain on websites, in magazines and tabulated over and over again in mortgage comparison tables. We believe that because there are so many variables within the minefield that is mortgages, that seeking mortgage advice is essential. In fact, we even recommend you speak to independent mortgage advisors or brokers who have access to the whole UK mortgages market because otherwise you might not get advice covering all mortgages available to you.
This is even more important if you are trying to get onto the first rung of the property ladder and are a first time buyer. With the property market being so tough in the UK, there are more and more first time buyer mortgages on the market now and good mortgage advice for your first home is essential.
Since 2004 the giving of personal financial and mortgage advice in the UK has been governed by the Financial Services Authority. Companies or individuals offering personal financial or mortgage advice must comply with the Financial Services Act or they are breaking the law. Many companies offer consultations on an ‘information only’ basis and you would need to formally agree to having requested to be advised on financial matters. Adherence to the rules of the Financial Services Act is called ‘compliance’.
Mortgage advice can be sought from a number of sources:
• A tied mortgage adviser: These work – and will therefore recommend products – on behalf of just one lender.
• A multi-tied adviser: These will recommend products from a limited range of lenders.
• An Independent Financial Adviser (IFA) or Independent Mortgage Advisor: These will recommend products from the whole market.
You are perfectly entitled to ask on what basis your advisor is operating.
Be warned though, that if you go to see an Independent Mortgage Advisor, they will be independent on mortgages but perhaps not insurance – and most homebuyers take buildings insurance alongside their mortgage.
By researching and reading it is relatively easy to glean a certain amount of useful information but by seeking personal mortgage advice from a mortgage advisor, you will be gaining the expertise of someone who knows all about all the different first time buyer mortgages on the market, what special deals are on offer, the peculiarities of the one lender versus another, what the latest mortgage releases are and of course they will always take your personal plans and circumstances into consideration.
As well as verifying who you are, you will be required to provide evidence of major income (your salary) and your major out-goings like car-loans, student loans etc. If you have loans or debts, it does not mean that you cannot apply for a mortgage.
Mortgage advice can be given in a number of different ways. It can be given by phone, email or in person - different advisors work in different ways. These days professionals are pretty flexible. In order to give you proper mortgage advice, mortgage advisors will need to a great deal of information about your personal finances. They want to determine that you can and will be able to make the mortgage payments. The last thing they want is to repossess your property if you fail to be able to make the mortgage payments. They will ask your permission before they give financial or mortgage advice. You will probably need to sign an agreement form saying that you agree to being given mortgage advices as opposed to just mortgage information.
When the mortgage advisor or mortgage brokers has taken all the information from you about what you want and your finances, you might, after agreeing which mortgage and which mortgage lender is appropriate to you, make a mortgage application.
The selected mortgage lender will scrutinise your form and carry outs some checks of their own
Some advisors gain their income form commission they earn from selling insurance policies and mortgages whilst others charge for giving mortgage advice. You are perfectly entitled to ask about what charges will be applicable in your instance.
Don’t be intimidated by mortgage advisors. Though they have trained for a considerable time to be able to offer mortgage and financial advice, they are human, just like the rest of us.
There are plenty of information about mortgages in the public domain on websites, in magazines and tabulated over and over again in mortgage comparison tables. We believe that because there are so many variables within the minefield that is mortgages, that seeking mortgage advice is essential. In fact, we even recommend you speak to independent mortgage advisors or brokers who have access to the whole UK mortgages market because otherwise you might not get advice covering all mortgages available to you.
This is even more important if you are trying to get onto the first rung of the property ladder and are a first time buyer. With the property market being so tough in the UK, there are more and more first time buyer mortgages on the market now and good mortgage advice for your first home is essential.
Since 2004 the giving of personal financial and mortgage advice in the UK has been governed by the Financial Services Authority. Companies or individuals offering personal financial or mortgage advice must comply with the Financial Services Act or they are breaking the law. Many companies offer consultations on an ‘information only’ basis and you would need to formally agree to having requested to be advised on financial matters. Adherence to the rules of the Financial Services Act is called ‘compliance’.
Mortgage advice can be sought from a number of sources:
• A tied mortgage adviser: These work – and will therefore recommend products – on behalf of just one lender.
• A multi-tied adviser: These will recommend products from a limited range of lenders.
• An Independent Financial Adviser (IFA) or Independent Mortgage Advisor: These will recommend products from the whole market.
You are perfectly entitled to ask on what basis your advisor is operating.
Be warned though, that if you go to see an Independent Mortgage Advisor, they will be independent on mortgages but perhaps not insurance – and most homebuyers take buildings insurance alongside their mortgage.
By researching and reading it is relatively easy to glean a certain amount of useful information but by seeking personal mortgage advice from a mortgage advisor, you will be gaining the expertise of someone who knows all about all the different first time buyer mortgages on the market, what special deals are on offer, the peculiarities of the one lender versus another, what the latest mortgage releases are and of course they will always take your personal plans and circumstances into consideration.
As well as verifying who you are, you will be required to provide evidence of major income (your salary) and your major out-goings like car-loans, student loans etc. If you have loans or debts, it does not mean that you cannot apply for a mortgage.
Mortgage advice can be given in a number of different ways. It can be given by phone, email or in person - different advisors work in different ways. These days professionals are pretty flexible. In order to give you proper mortgage advice, mortgage advisors will need to a great deal of information about your personal finances. They want to determine that you can and will be able to make the mortgage payments. The last thing they want is to repossess your property if you fail to be able to make the mortgage payments. They will ask your permission before they give financial or mortgage advice. You will probably need to sign an agreement form saying that you agree to being given mortgage advices as opposed to just mortgage information.
When the mortgage advisor or mortgage brokers has taken all the information from you about what you want and your finances, you might, after agreeing which mortgage and which mortgage lender is appropriate to you, make a mortgage application.
The selected mortgage lender will scrutinise your form and carry outs some checks of their own
Some advisors gain their income form commission they earn from selling insurance policies and mortgages whilst others charge for giving mortgage advice. You are perfectly entitled to ask about what charges will be applicable in your instance.
Don’t be intimidated by mortgage advisors. Though they have trained for a considerable time to be able to offer mortgage and financial advice, they are human, just like the rest of us.
UK Mortgages For The First Time Buyer
November 18, 2008 by admin
Filed under Mortgage Articles
With the cost of houses and property continuing to rise, UK mortgages are also becoming more expensive. For first-time buyers, this is more of a problem than for those already on the property ladder. With the average cost of a new home now almost £200,000, it’s almost becoming an impossibility to get your first mortgage.
Thankfully, there are options available to you, as well as numerous companies who specialise in this particular market. From helping you find the best type of mortgage in the UK for first time buyers to explaining the different interest rates and charges, taking the first step onto the property ladder can be a little more realistic.
Where to Start
The first thing you need to do is decide how much you can afford, and then take it from there. One of the best features of UK mortgages compared to other countries is that there are a host of different ways specifically to help you buy your first home.
100% Mortgage
For example, you can take out what’s known as 100% mortgage. This can make a huge difference in being able to afford your own home if you’re a first time buyer. With a 5% deposit on a £200,000 home costing a minimum £10,000, it can allow you to buy a better home than you might have been looking at.
However, you do need to be careful, since 100% mortgages tend to come with a higher interest rate than ones where you pay a deposit. They can also be more difficult to get, due to increased credit checks.
Shared Ownership
Another option is to look at shared ownership - this is where you can buy a home with a friend and share the costs. The benefit of this is that you can both get on the property ladder, although make sure you both sign an agreement for what happens should one of you want to sell their half.
Guarantor Mortgage
This is a particularly useful option for a younger person looking to buy his or her own home. Many banks and lenders will now allow a parent or guardian to “co-sign” the mortgage as a guarantor. This means that if the homeowner can’t meet the mortgage payment, the guarantor will meet it instead. Not only does this help satisfy the lender, it may also let the buyer afford a more valuable property. However, these can be risky, since if the guarantor ends up having to pay the mortgage, it could strain whatever relationship they have with the buyer.
Graduate and Professional Mortgages
Another type of mortgage fairly unique to the UK is this one, and it offers an excellent opportunity to anyone who has either just graduated from University, or is employed in a certain profession. Since a University graduate will normally have a large amount of debt, it can be hard for them to get a mortgage. However, lenders are of the opinion that a graduate will be able to find a high-paying job, so they will overlook any debt and allow a graduate mortgage.
A professional mortgage is similar, in that banks are far more likely to give you a mortgage if you have a certain job. Professions such as lawyers or doctors are known to see large initial wage increases, and this helps in getting a mortgage approved.
There are many more UK mortgage methods available for first time buyers, including state help. For all the options available to you, a specialist mortgage advisor will be able to help you find the package that’s best for you.
Thankfully, there are options available to you, as well as numerous companies who specialise in this particular market. From helping you find the best type of mortgage in the UK for first time buyers to explaining the different interest rates and charges, taking the first step onto the property ladder can be a little more realistic.
Where to Start
The first thing you need to do is decide how much you can afford, and then take it from there. One of the best features of UK mortgages compared to other countries is that there are a host of different ways specifically to help you buy your first home.
100% Mortgage
For example, you can take out what’s known as 100% mortgage. This can make a huge difference in being able to afford your own home if you’re a first time buyer. With a 5% deposit on a £200,000 home costing a minimum £10,000, it can allow you to buy a better home than you might have been looking at.
However, you do need to be careful, since 100% mortgages tend to come with a higher interest rate than ones where you pay a deposit. They can also be more difficult to get, due to increased credit checks.
Shared Ownership
Another option is to look at shared ownership - this is where you can buy a home with a friend and share the costs. The benefit of this is that you can both get on the property ladder, although make sure you both sign an agreement for what happens should one of you want to sell their half.
Guarantor Mortgage
This is a particularly useful option for a younger person looking to buy his or her own home. Many banks and lenders will now allow a parent or guardian to “co-sign” the mortgage as a guarantor. This means that if the homeowner can’t meet the mortgage payment, the guarantor will meet it instead. Not only does this help satisfy the lender, it may also let the buyer afford a more valuable property. However, these can be risky, since if the guarantor ends up having to pay the mortgage, it could strain whatever relationship they have with the buyer.
Graduate and Professional Mortgages
Another type of mortgage fairly unique to the UK is this one, and it offers an excellent opportunity to anyone who has either just graduated from University, or is employed in a certain profession. Since a University graduate will normally have a large amount of debt, it can be hard for them to get a mortgage. However, lenders are of the opinion that a graduate will be able to find a high-paying job, so they will overlook any debt and allow a graduate mortgage.
A professional mortgage is similar, in that banks are far more likely to give you a mortgage if you have a certain job. Professions such as lawyers or doctors are known to see large initial wage increases, and this helps in getting a mortgage approved.
There are many more UK mortgage methods available for first time buyers, including state help. For all the options available to you, a specialist mortgage advisor will be able to help you find the package that’s best for you.