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What is a Mortgage?
A mortgage is a loan, usually from a bank, finance company or
building society to help you buy your home.
A mortgage is a loan, from a bank or building society that is
secured against your house or flat. You have to pay back
everything you borrow from your lender within an agreed length of
time (the mortgage term). You also have to pay interest on what
you have borrowed.
A mortgage is a loan you take out to buy property. Most banks
and building societies offer mortgages, as well as specialist
mortgage lending companies.
To repay the mortgage you either make monthly repayments of
interest and capital, or you pay interest only each month then
repay the loan at the end of the mortgage term from separate
savings or investments.
The purpose of a mortgage is, quite simply, to enable a person
to borrow money using the property as security. As the prices of
houses are beyond the immediate personal resources of most
purchasers, it is necessary to enter into a borrowing agreement
with a lender.
A mortgage is therefore a form of a secured loan, whereby the
lender agrees to lend a person the money to enable them to
purchase a property. This loan is secured against the property by
a legal charge and is subject to the purchaser and the property
being able to meet the lender's criteria. This loan is then paid
back over a period of time along with the interest charged by the
lender.
In most cases lenders will offer three times a single person's
salary or two-and-a-half times the borrowers' joint salaries.
However you should consider whether your budget can afford the
repayments before borrowing to the hilt.
A mortgage is a long term financial commitment with repayments
typically spread over a term of up to 25 years. However in
practice, people often sell their house before the end of the
mortgage period. The original loan is then repaid from the sale
of the first house and a new loan is taken out to buy the new
home.
Each joint borrower is individually liable for the amount of
the loan and interest due to the lender and is always responsible
for the full amount outstanding. Events such as separation,
divorce, unemployment, long term sickness, injury or disability
could ultimately cause a house to be sold and the mortgage to be
terminated. The early repayment of a loan can have different
financial consequences depending on the type of mortgage
involved.
Most mortgage lenders also require you to have a suitable life
assurance policy, which would repay the borrowing in the event of
death or critical illness. This ensures that, in these
distressing circumstances, your house would not have to be sold
to repay the mortgage.
You may find the perfect mortgage for you at your local
building society. But shopping around could land you with a much
better deal or alternatively you can use a mortgage broker.
Mortgage brokers scour the market to find the most suitable deal
for you. A good mortgage broker can save you time and money.
If you are in full-time employment the lender will ask for
written evidence for example, payslips and your P60 for the past
two years. They'll also probably write to your employer asking
for confirmation.
If you're self-employed it more difficult to get a mortgage
and as a result there are lenders who specialise in the
self-employed. You would need to show three years audited
accounts. If you haven't been in business long enough then the
lender should accept a letter of confirmation from your
accountant.
You may freely reprint this article provided the author's
biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
website.
 MORE RESOURCES updated Thu. February / 09 / 2012
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Anchor Bancorp Wisconsin Inc. Announces Third Quarter ResultsMarketWatch (press release)Revenues in the quarter ending September 30, 2011, were unfavorably impacted by a $5.1 million impairment charge on the capitalized mortgage servicing rights asset due to lower interest rates and the resultant mortgage refinance activity. |
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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