Not yet registered? Create a OverBlog!

Create my blog

Types of UK mortgages

People who apply for mortgage loans in the UK, must take into account all the terms and conditions including the interest rate payable. When choosing a home mortgage in the UK, for example, borrowers should select the mortgage that is suited to their personal financial situation.

Features of UK mortgages

Mortgage terms to consider are whether the interest rate is fixed or variable, or whether there are fees required with the application or penalties for early redemption of the mortgage. The amount of the loan required is important, as mortgage loans are likely to be limited to a maximum of a certain percentage of the applicant’s annual salary. The amount loaned is likely to be restricted to a maximum percentage of the value of the house. The length of the repayment period may be around 25 years, and will probably have to be repaid before the borrower reaches retirement age. Regular mortgage repayments may be required in addition to interest payments, or the mortgage could require payment of interest only with repayment of the whole sum at the end of the term. It may be possible to set up an offset account, in which funds could be saved and interest on the mortgage reduced. The taxpayer may be allowed a mortgage reserve account to borrow a further amount if necessary on the same terms as the original mortgage.

Fixed rate mortgages

At a time when interest rates are expected to rise, a fixed rate mortgage will probably be offered at a higher rate of interest than variable rate mortgages. The prospective buyer must consider how much higher a variable rate mortgage will rise in the near future and to what extent a fixed rate mortgage may be more expensive in the long run. A fixed interest rate has the advantage of certainty, enabling the borrower to plan interest payments into the future and calculate personal finances accurately.

Tracker mortgages

Base rate tracker mortgages are mortgage loans where the rate of interest is linked to the base rate, normally being expressed as the base rate plus a certain percentage. This rate will rise and fall with the base rate and may be advantageous where interest rates are falling or are likely to remain at the same level for some time into the future.

Discount mortgages

Those looking for low mortgages may consider a discount mortgage which offers interest rate at a discount from the lender’s normal variable rate for a certain length of time, normally a few years. After this time, the interest rate returns to a variable rate. Borrowers should give careful attention to the rate that they will pay after the initial discount period has finished, and how this is determined.

Same category articles Banking

Advice from money saving experts

Advice from money saving experts

Presently, there are tough economic times in the UK. Saving money, banking wisely, maintaining enough money in bank savings account to take care of home needs over a period, spending carefully and planning wisely for the future, and other such prudent measures, have been necessitated by the recession and an uncertain future. Here, then, is some sound money advice taken from top money blogs.
A guide to commercial lending

A guide to commercial lending

Getting commercial loans can be a challenge for many small and medium businesses, considering the high costs of financing. Loans are sometimes required at a very short notice and the lenders may take advantage of the situation and quote high interest rates. All lending institutions and banks are not the same and the borrower must be able to carefully distinguish between different financing loans. Read this article to learn more about commercial lending.
Cheap car loans: How to qualify for a low APR auto loan

Cheap car loans: How to qualify for a low APR auto loan

APR stands for Annual Percentage Rate. Higher the APR, the higher will be the monthly repayment. Paying a high APR on auto loan is a sheer waste of hard-earned money. Getting a low APR loan should be on top of every loan taker’s agenda. This guide details how a person can qualify for low APR loan deals even when he is paying off a high APR auto loan.
A guide to Peer to peer lending

A guide to Peer to peer lending

Peer-to-peer lenders offer unsecured loans for up to $35,000. Rather than borrowing money from a bank, you can take out a loan from a group of small investors. The person-to-person lending market is dominated by Prosper and Lending Club. It is a different way of getting the money you need. However, but you are still going to need a good credit rating to get approval.