Types of Mortgages
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. You may freely reprint this article provided the author's biography remains intact:.
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.Best Buy to Let Mortgages
Are you looking for the best buy to let mortgages with the lowest rates payable? Need to calculate repayments on-line? Not sure how much you can borrow? These are all questions that you may well be asking yourself if you are looking for the best buy to let mortgages. Finding the right buy to let mortgage is crucial to your success as a property investor. Unlike other forms of investment, a lot of the money you put into a buy-to-let property is likely to be borrowed. Over the last few years, the buy to let mortgage market has boomed, and borrowing money to invest in this way has become easier than ever. There are a number of different buy to let mortgage products available from fixed rates, discounted variable rates, discounted rates and so on.
Different products may be suitable for different investment properties. Finding the cheapest buy to let mortgage may not always be the best option so there are a number of things to consider when deciding which buy to let mortgage is best....
Best Buy to Let Mortgages
Mortgages > Best Buy to Let Mortgages
Adverse Mortgages May not Benefit the Consumer Warns Mias
(ContentDesk) March 22, 2006 -- MIAS (the Mortgage and Insurance Advisory Service) is concerned that the boom in the sub-prime or adverse credit mortgage market will not necessarily translate into a better deal for consumers.In the past, the worst excesses of the sub-prime market could be summed up as, the miss-selling of the most expensive and complex mortgages to some of the least affluent and financially-astute people.With so many high street lenders moving into this sector, including Alliance & Leicester and new arrivals such as DB Lending funded by Deutsche Bank, MIAS would hope that this would change. However, the old adage that increased competition is always a good thing for customers, because it brings down prices, may not apply in the adverse credit market. Commenting, Alistair Good, Managing Director of MIAS (http://www.mias-ltd.co.uk ) said: The increased profit margins of the adverse credit sector must be hugely...
Adverse Mortgages May not Benefit the Consumer Warns Mias
Mortgages > Adverse Mortgages May not Benefit the Consumer Warns Mias
What are "interest only" mortgages?
Mortgages are considered to be "interest only" if your monthly payment does not cover the entire loan payment due, that is the mortgage interest and a payment to decrease the loan principal. Every month you are paying the interest only and this means that the loan is literally not going away. The purpose of setting up an interest only loan is to give the customer the lowest possible monthly payment while still maintaining the loan.Cannot afford the full monthly payment?If you are in a position where you cannot afford the full monthly payment, a lender might allow you to pay the mortgage interest for the first couple of years and then the loan will be fully amortized at a future date. If you do get an interest only mortgage try to make the interest only period as short as possible. Make a projection: can you pay two years into the loan?If you cannot get out of the interest only cycle within a year or two then perhaps you are not in a financial situation where you can handle a mortgage....
What are "interest only" mortgages?
Mortgages > What are "interest only" mortgages?
Interest-only Mortgages Have Their Pitfalls
Rising home prices, particularly on the East and West coasts have put the costs of home ownership seemingly beyond the reach of many. And yet, home ownership is up nationwide, and the percentage of Americans who own their homes is the highest it has ever been. How is this possible?There are more different types of mortgages available to home buyers than ever before, and one that is growing in popularity is the interest-only mortgage. With an interest-only mortgage, the buyer pays no principal for the first few years of payments. The period of time varies, and is typically anywhere from one to five years.
At that time, the principal is added to the mortgage payments and the amount of the payment increases. By keeping the payments lower for the first few years of the mortgage, the interest-only mortgage allows buyers to obtain a more expensive home than they otherwise might. The buyer's income will probably increase over time, making it possible to afford the higher payments that...
Interest-only Mortgages Have Their Pitfalls
Mortgages > Interest-only Mortgages Have Their Pitfalls
Types of Mortgages
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...
Types of Mortgages
Mortgages > Types of Mortgages
Bad Credit Mortgages - Can You Get One?
Copyright 2006 Geoff Morris
In this day and age, people get bad credit histories for all sorts of unforeseen reasons, apart from the old standard of living above one's means.
I know several people who have got into difficulties through either redundancy, prolonged illness or a car accident, divorce, or in fact one luckless fellow had all three situations arise.
Is it possible to get a loan even with a bad credit mortgage? In today's mortgage and loan trends, a bad credit mortgage is absolutely possible.
In the past, applying for a loan involves a thorough check up on your credit history and income background. With the world wide web, it is virtually impossible to hide any defaults. If your history is less than perfect or if your income is not that high or both, then your application for a loan is instantly rejected. This practice limits the number of people who can apply for a loan.
Today's market has adopted more flexible...
Mortgages > Bad Credit Mortgages - Can You Get One?
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Penny Stock Trading
Penny stock aspirants need not worry too much over how they can get started. For the procedure required to be followed in the case of penny stocks is similar to those applicable to other stocks. In other words, you have to open a brokerage account. However, actual trading in the penny stocks is not as simple as in the case of (for example) blue chip shares, because the market intelligence required to make the right investment decision is not easily available. You have to collate this information...
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