A mortgage is borrowing money using property as a security, a
type of secured loan in other words. Primarily, the purpose in
borrowing the money is to purchase a property.
A mortgage is really another word for a property loan - a loan
that allows you to borrow a large amount of money in order to buy
a home or property which is secured on the value of that
property, and which you pay back over an agreed period of
The term 'secured' means that if you default on payments and
can't keep up with the payments schedule as agreed, the lender
has the right to sell your property in order to recover their
A mortgage can be broken down into four main parts:
Capital - This is the amount of money that you borrow to buy
Interest - This is the charge for borrowing money. Worked out
as a percentage of the capital.
Term - This is the fixed period of time that the money is
Repayments - These are the regular payments you make
throughout the term of the mortgage.
The mortgage is created by a legal charge on the property and,
significantly, does not involve the transfer of land. The charge
confirms that the property has been pledged to the lender as
security for the mortgage loan.
Mortgages are usually repaid over 25 years, but depending on
your situation and earnings it can be arranged over either a
longer or shorter period of time. The amount you borrow is called
the 'capital', and you will also have to pay back the interest
charged to you by the lender.
The title deeds are held by the lender but when the purchase
monies are paid over to the vendor, usually through a solicitor,
the mortgagor becomes the owner of the property. The legal charge
is supported by a loan agreement between the two parties which
sets out the terms of the loan, the responsibilities and
You have two options - repay the capital and the interest
together - this is a 'repayment' mortgage, or repay the interest
only, and organise another investment to cover the capital at the
end of the term. This is known as an 'interest only'
When looking at how much money a lender is willing to let you
borrow, there are two factors that they will want to
First of all, they will want to know how much you earn.
Usually you will only be able to borrow around three times your
If you are looking to purchase a joint mortgage with a partner
or friend, then the income multiplier may be worked out
differently. Some lenders will offer two-and-a-half times the
joint salaries, or three times the higher salary, and one times
the lower salary, whichever is higher.
Most lenders will also take into account the amount that you
are looking to borrow, and the total value of the property.
Although some lenders will allow you to borrow the full value of
the property, most will only lend a certain percentage, say
When applying for a mortgage, there are certain points that
you will need to consider before you sign on the dotted line.
First of all you need to consider how much you can afford. You
should complete a budget, and work out how much money you have
coming in, and how much money you spend each month. This should
then give you an idea to how much you can afford to pay a lender
each month for your mortgage.
You should also consider whether your income would allow you
to afford the property you are after.
You also need to think about how long you will need to borrow
the money for. A mortgage is a major financial commitment and
will require that you can keep up the repayments for the full
If you repay your mortgage before the end of the designated
term you may well be charged a penalty. Penalties are
particularly common in the first few years of a loan or if you
are taking advantage of a fixed rate or a discounted rate and can
be very significant in size. Sometimes it is possible to serve
notice to avoid these penalties.
Furthermore, some lenders will charge interest until the end
of the month in which redemption occurs so it may pay you to time
the redemption of your mortgage to avoid this charge. Some
lenders also make additional charges such as vacating fees, deed
release fees or other administration charges.
All of these costs should be highlighted in the mortgage offer
or in the standard Terms and Conditions provided with that offer.
Before committing to your mortgage, please check the redemption
penalties which will be mentioned in the mortgage offer.
Getting a mortgage can be very complicated. If you are unsure
about which mortgage to go for, then you should seek some
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
MORE RESOURCES updated Wed. November / 14 / 2018
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
CUNA News (press release)
'Flat' mortgage market aheadCUNA News (press release)This year is turning out like most people predicted in the mortgage arena. Rising interest rates have significantly hampered the mortgage refinance market. The growth of the purchase market can only be as great as the inventory of available homes.
How Credible worksCredible News (blog)It's quick and painless. Tell us a little bit about you and your home to get accurate prequalified rates without impacting your credit score. 2. Compare rates from multiple lenders. View the interest rate and cost breakdown of each loan to choose the ...and more »
RELATED MORTGAGE AND REFINANCING ARTICLES:
Refinancing Your Home
Mortgage Loan With Bad Credit
There are numerous reasons a person has bad credit. Late or
partial payments, missing payments, and too many
outstanding debts could all be factors that have left you
with a poor credit rating.
Buying A Home With No
Money Down or Bad Credit - PMI Can Make It
Private mortgage insurance is an excellent method for
homebuyers who have trouble saving money, are short on
money, or have bad credit, to get into a home now. Private
mortgage insurance is provided by a third party to protect
the lender in the mortgage contract.
Home Equity Loan - When
Does Refinancing Make Sense?
For the last two years, interest rates have been much lower
than anytime during the last thirty years. This has
resulted in an unprecedented boom in real estate sales,
home refinancing and home equity lending, as borrowers try
to take advantage of these rates for the long term.
Self Employed Mortgage
Loan - Getting a Mortgage When You're Self
Being self employed has many benefits. When you are
self-employed, you can write off all of your deductions on
No Deposit Home
A few years ago, many of us would have had a light chuckle
to ourselves if someone mentioned that you could borrow
money to buy a house with only the promise of solid future
earnings. But today this is a regular occurrence.
Buying a Home With Bad
Credit - Why a Recent Bankruptcy Will Not Stop You From
Buying a home with bad credit is possible with the help of
a subprime lender even if you have a recent bankruptcy or
foreclosure. These mortgage lenders specialize in financing
home loans for people with poor credit.
What is a Home Equity
A home equity loan is a loan that is guaranteed by your
home. Are you in urgent need for cash and want to get the
same without selling off your home or property? Getting a
home equity loan is a good way to do so.
Buying a Home With Poor
Credit Is Easier Than Ever
Buying a home with poor credit is easier than ever with
online mortgage brokers. You can easily find sub prime
lenders, compare rates and terms, and complete the process
on your schedule, not the banks.
Proceedings and Understanding Your Options
Every year over 8 million homeowners are seeking help
preventing foreclosure proceedings. This is a stunning 30
I Have A Slice of the
American Dream and It is a 30 Year Nightmare
Well, we did it. We are buying a beautiful, brand new
house, planning our wedding, and getting ready to move.
Home Equity Loan - With
a Reverse Mortgage, Your Home Pays You!
The home equity loan has become quite popular in the last
five years, and Americans have tapped into the equity of
their homes in record numbers. The reasons vary, although
home improvement and debt consolidation are the most common
reasons for borrowing against a home's equity.
Home Equity Loan or Home
Equity Line of Credit - Which is right for you?
The most common type of home equity loan is the term loan.
This loan is set for a fixed amount of time, anywhere from
five to fifteen years.
Rates May Be Rising:
Mortgage And Refinancing Preparation Made Simple For
Buying a home is probably the single largest investment
most people make in a lifetime. By preparing yourself and
your credit before a home purchase or refinance, you can
ensure a smooth finance process and can potentially save
thousands on your loan.
What is a Capped
A capped mortgage is a variable rate mortgage with a capped
limit beyond which the rate paid will not exceed. Mortgages
are available in a number of different interest rate
options, one of which is the capped rate.
First Time Home Buyer
Loans Made Easy
When it comes to first time home buyer loans, a little
research can save you thousands of dollars over the life of
your mortgage. A wise consumer selects a mortgage lender
prior to shopping for a home.
Mortgage Advice To Make
Mortgages A Really Smooth Ride
Mortgages are easy as long as you understand them well. But
how many borrowers can be confident of their knowledge of
It might not be too big of an exaggeration to say that the
construction loan is one of the more daunting aspects of
building your custom home. Before we started our project, I
had nightmares about trying to pay two full mortgages at
the same time (our existing mortgage and the construction
loan), and I didn't see how it was at all possible.
Home or Investment
Property Equity: Be Sure the Bank Gives You All that You
Home equity is your own personal money machine. If you want
financial freedom, a home equity loan is probably the best
way to achieve it.
Obtaining a Home Equity
Private lenders, banks, and mortgage companies are all
setting up shop on the internet, and all make it possible
to obtain a home equity loan online. Competition between
lenders is stiff, so be sure to check a few companies that
offer applications about their rates, products, and
13 Extra Costs to be
Aware of Before Buying a Home
Whether you're looking to buy your first home, or trading
up to a larger one, there are many costs - on top of the
purchase price - that you must figure into your calculation
of affordability. These extra fees, such as taxes and other
additional costs, could surprise you with an unwanted
financial nightmare on closing day if you're not informed
used office furnishings-supplies-equipment-desks-cubicles-service-counters for
sale in Akron Ohio
Die cast model cars for sale in Akron Ohio
used cars for sale in Akron Ohio
unfurnished homes for
rent in Akron Ohio
ARM compare rates find the best rates current in your area lenders read reviews calculator adjustable rate loan home lenders brokers
quotes florida houston gmac washington interest only 2nd software debt consolidation
reverse senior equity texas maryland options lending bad credit
option one ameriquest chase first banks emc residential california miami dallas est branch marketing
home company commercial yahoo online bad credit low credit no credit