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Getting the correct mortgage provider may prove to be a difficult experience. Access to the internet will end up improve the process in the majority of cases. These days the great majority of lenders have an internet presence and can publish their services and benefits over the internet. You can take advantage of the internet to get through to mortgage companies to ask for advice. The mortgage lender's representative should be able to assist you on an appropriate
Mortgage basics
In basic terms a mortgage product is a monetary advance given to pay for real estate, to be repaid over a specified amount of time. The usual repayment term of a mortgage advance is around 25 years however it can be revised to go with your personal situation.
A mortgage is composed of two distinct elements : the principal (the lump sum borrowed) and the interest (the amount charged by the mortgage company for the benefit of getting the lump sum borrowed).
There are essentially 2 types of mortgage products :
A repayment mortgage loan pays back both the capital and the interest of the mortgage over the agreed term of the mortgage. On the condition that the agreed monthly payments are made in good time, a repayment mortgage ensures that the whole of the mortgage amount will be paid off at the completion of the loan period.
An interest only mortgage pays off only the interest on the mortgage given - hence the "interest only" name. As the mortgage capital is not reimbursed in this type of mortgage loan, you must make your own provision to assure the principal is covered before or at the end of the mortgage agreed period. Common approaches of providing this kind of mortgage are using savings or investments plans for example endowment policies or the capital could be provided by the resale of the real estate.
Establishing which type of mortgage repayment method is most suited to you is governed by your individual financial and employement circumstances.
With a repayment mortgage you have the certitude that the property will be totally repaid at the end of the loan. Yet in the first few years of your loan most of your mortgage payments will end up being payment of interest rather than capital. If you plan to move home on a regular basis or re-mortgage to get a better mortgage deal, you could find that a small amount of the capital is repaid.
With an interest-only mortgage, if your investment vehicles perform better than expected, you can pay off the principal sooner than expected, bringing down the duration of mortgage and saving money. Before making a decision about the style of mortgage product which is right for you, we recommend that you contact a fully qualified mortgage advisor.
How much can you receive from a mortgage lender?
Although there are no set guidelines as to what amount a mortgage company is ready to lend, by and large if you want to buy a property as your principal residence, mortgage providers could lend around x 3 your joint gross annual salaries, depending on your personal circumstances, such as employment status, your current level of borrowing ,etc…
Before you take up an application to get a mortgage you are advised to draw up a budget featuring your salary and your spending such as gas and electricity bills, phone bills, the cost of your car, existing, loan repayments and any ofther bills you get during the month. Within this account for the cost of your new property (including new utility bills and taxes). Be sure to include insurance premiums in your budget contents insurance and / or mortgage insurance. This method will give you a clear idea of the mortgage repayment you could realistically afford
How much mortgage deposit do mortgage companies want?
The best part of mortgage lenders will offer you a maximum of 90 percent of the value of your prospective home, meaning you will be required to provide a ten percent deposit. Nevertheless a small number of mortgage lenders will loan you a 100% mortgage but this type of mortgage is less advantageous and is in some ways a very expensive method to get a mortgage. A bigger deposit of above 15%, will present you with a greater choice of mortgage prospects with the most attractive interest rates
Obtaining a mortgage loan with a bad credit rating
A small number of mortgage lenders offer lending for people disadvantaged by a impaired credit file (CCJs, defaults) These mortgage providers are called sub-prime lenders. They will review any adverse credit mortgage application (arrears, ccj's). Due to the higher risk involved in lending to applicants with poor credit, these sub-prime mortgage companies request a superior interest rate on the mortgage.
With a bad credit record (ccj's / arrears) you should consider cautiously regarding the cost of getting a poor credit mortgage. You will need a superior level of deposit of no smaller than 25percent or more.
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