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Guide to mortgages in the UK
by Chris Smith


Planning to take the first mortgage or the nth mortgage of your life? Being complacent in the process can be dangerous. The fact that you hushed up as a triviality, may become the Achilles’ heel.

Strict vigilance will be necessary to ward away any untoward repercussions on the future. Mortgage is a legal term with a heavy impact on the finances of the borrower. Ignorance of law is no excuse. There are frequent changes in the mortgage market with constant additions and deletions in the rules governing the mortgages. The rules that were prevalent a few decades ago may have become outdated now.

Expecting the borrowers to be conversant in the rules related to mortgages will be unjustifiable. They are already burdened with their jobs. Trying to gain knowledge of the mortgages may divert their energies to tasks other than their core areas of operations.

However, a basic knowledge of the mortgages will be necessary in order to save oneself from the hands of scheming lenders.

Independent financial advisors provide vital information about the mortgages. The advice provided by them is unbiased and not inclining towards any particular lender. Independent financial advisors provide advice on general mortgages as well as specific mortgages to deal with specific requirements. Association of Independent Financial Advisors, representing independent financial advisors all over the UK helps borrowers find a local advisor.

Many a times lending organizations offer valuable advice in the form of the term of repayment, method of charging interest, etc. However the borrower must have the knack of differentiating between valuable advice and marketing products.

Perplexity for those taking mortgages further increases because of the vast multitude of terms associated with them. Mortgages are available for practically every purpose and for different classes of people. The people who are buying homes for the first time can have a first time buyer mortgage. Those planning to benefit from the equity in ones home but not repay the amount received, can take a reverse mortgage. Right to buy mortgages caters to the council tenants only, who are planning to buy their council homes.

The next decision to be made is regarding the amount of mortgage. The amount of mortgage will differ with the lenders and the type of mortgage taken. The risk involved in a mortgage deal will also decide the amount of mortgage allowed to the borrower. Mortgagors or borrowers have to extend a certain percentage of the mortgage to the lender as a deposit. More is the deposit, more is the amount tendered as the mortgage. Before the mortgage process is initiated, the amount to be rendered as deposit must be arranged. Those who are unable to arrange deposits can take a 100% mortgage, where no deposit is required.

The borrower will have to fill up an application form for getting the mortgages. They can either fill the form online or make a personal visit to the lender. Some lenders offer discounts for borrowers applying online.

A copy of the credit report from the main credit reference agencies, namely Experian and Equifax must be kept in handy. If there are any discrepancies in the credit report then they must be immediately sorted out.

The property is valued to decide the amount of mortgage that the mortgagor qualifies for. The cost of the surveys and valuation are to be borne by the mortgagor himself. The borrower can request for a revaluation in case he feels the valuation has been incorrect.

The pillar on which the mortgage is going to stand is constructed in this stage. Various details of the mortgage like the manner of repayment and the interest to be charged are to be decided.

One wrong step in the mortgages and you could lose your home to the mortgage lender. Though it is difficult to foresee the future, one can at least provide well for the future. Making well informed decisions can help cordon off the ill effects of mortgages.


About the Author
Chris Smith works as a consultant in easy mortgage. He is proficient in the credit market because of a degree in finance from the esteemed University of Cambridge. He has also done his masters in insurance management from the Risk Management Research Institute.To find Mortgage,first time buyer mortgage,but to let mortgage that best suits your needs visit http://www.easymortgageuk.co.uk




Types of Mortgages
by John Mussi


Here is a useful guide to the different types of mortgages that are available.

A mortgage is a loan you take out to buy property. You can get a mortgage direct from the lender such as banks, building societies and specialist mortgage lenders.

Your mortgage is probably the biggest loan you will ever take out, so it is important to get a mortgage that suits you. This will depend on your personal circumstances and your plans for the future. Many mortgages have hidden drawbacks. Get independent advice before you choose a mortgage.

There are two basic types of mortgage, interest-only and repayment. The option you choose is determined by the way you want to repay your loan. There is no hard and fast rule about which is better. It is a matter of individual preference.

Interest only

An interest-only mortgage allows you to repay just the interest on your loan, but you have to take out an investment that will mature to pay off the outstanding amount. If your investment performs well then you may have some money left over after paying back your mortgage. But there is also a risk that the investment will under-perform leaving you to make up any shortfall.

Repayment

A repayment mortgage requires you to pay back both interest and loan capital, so at the end of your mortgage period there is no money owing. Early on you pay mostly interest, so it might seem that the outstanding balance never gets lower. But later on you will repay more capital, and the total will decrease more quickly.

Here is a selection of the different mortgages that are available:

Discount mortgages

This is where lenders offer a reduction on the standard variable rate for a fixed period. This type of mortgage is good for someone wanting to make savings in the early days of owning a property. But be aware that the rate can change as it is fixed to the standard variable rate.

Fixed mortgages

With a fixed rate, your payments stay the same no matter what happens to the base rate. This is a sensible option for people who want to know exactly what they will be paying for a certain period. There is always a risk that, if interest rates fall, you might be left paying an uncompetitive rate. On the other hand, a rise in rates will leave you paying less than people on other schemes.

Tracker mortgages

This type of mortgage follows the Bank of England base rate. It will usually stay a set margin above the base rate for the duration of the loan. They are suitable for people who think base rates might be on a downward trend.

Capped mortgages

These schemes are similar to fixed rate mortgages, but give you a get-out if rates fall sharply. They allow you to pay either the capped rate or the lender's standard variable rate, whichever is lower. They can initially be slightly more expensive than other deals, but if rates fall they can pay off.

Offset mortgages

They will link your current account and your mortgage. You pay your salary into an account and your mortgage payment is taken out as per usual. But any extra cash in the account is also used to offset against the amount you owe on the mortgage, so you pay less interest.

Flexible mortgages

Another way of managing your mortgage is through a flexible arrangement. This allows you to pay more money off your mortgage when you have it, or take a payment holiday if things are a bit tight. Some lenders will allow you to overpay each month and withdraw the extra cash if you need it later. And if you have the money, you can pay off your mortgage early. Any money you can pay off early will save you interest payments.



About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.