Mortgages’ Knowledge
Everything You Need To Know About A Mortgage Loan
When it comes to the mortgage process, not all mortgages are the same, which can make the whole process of borrowing money incredibly challenging. With a range of mortgage lenders available to you, each mortgage provider offers different options from monthly payments, interest rates, bank or building society options and mortgage term lengths. Our job here at “Mortgage Made Easy” is to help you find a monthly mortgage payment that will work for you with the best interest rates.
The most important thing about understanding mortgages is that you need to know your interest rate, down payment and property taxes before you sign on any dotted line. The long length means it is crucial you understand the mortgage application and precisely what you agree to. The main points to understand are; how much your deposit is, how much your monthly payment is, and whether you have a fixed interest rate or adjustable-rate mortgage.
Who Needs To Get A Mortgage?
A mortgage is a loan specifically designed for real estate, there for whenever you want to buy property. The mortgage amount you will need depends on the property price. To determine what mortgage you are eligible for, you will need to go through a series of checks carried out by the federal housing administration. These checks include a credit report and your financial information. If you are in a lower financial situation than the mortgage adviser is looking for, you may need to pay a higher interest rate.
When looking for a mortgage, most lenders will make sure you have a stable and reliable income and a debt to income ratio of just over 50 and a good credit score. Similarly to any loan terms, you need to be in a position to pay the money back; this includes first-time buyer mortgages and renewals.
We recommend that when you have your mortgage agreed, make sure you use a knowledgeable real estate agent to get you a final quote on the property you want to buy; you should choose to take our private mortgage insurance. Make sure you are covered.
Who Needs To Get A Mortgage?
A mortgage is a loan specifically designed for real estate, there for whenever you want to buy property. The mortgage amount you will need depends on the property price. To determine what mortgage you are eligible for, you will need to go through a series of checks carried out by the federal housing administration. These checks include a credit report and your financial information. If you are in a lower financial situation than the mortgage adviser is looking for, you may need to pay a higher interest rate.
When looking for a mortgage, most lenders will make sure you have a stable and reliable income and a debt to income ratio of just over 50 and a good credit score. Similarly to any loan terms, you need to be in a position to pay the money back; this includes first-time buyer mortgages and renewals.
We recommend that when you have your mortgage agreed, make sure you use a knowledgeable real estate agent to get you a final quote on the property you want to buy; you should choose to take our private mortgage insurance. Make sure you are covered.
Book An Appointment With An Advisor Today
If you are looking for advice and guidance on mortgages and what it is you should be looking for, get in touch with our mortgage advisors to make an appointment today. We will help you in any way we can.
A Breakdown Of How A Mortgage Works
Deposit
- You will need this to purchase a property, the lowest deposit you can put down on a property is 5%
- your parents, brother or sister can gift you your deposit, this can be a cash gift or a gift of equity.
- A gift of equity is when the owner of the property is your parent or sibling.
- The bigger your deposit the better the deal, a big deposit reduces your interest rate, making it easier for you to get an offer.
Monthly Installments
- The payment you need to make each month to pay off the mortgage over the term of the loan.
- It covers all capital and interest payments.
- If you don’t keep up repayments, your home may be reposed.
Fees
- The different charges you need to pay upfront to get the loan.
– Valuation fee
– lenders admin fee
– solicitors fees - Some deals come with a cashback to help you pay these fees.
- Lenders can offer you free valuation or free legal fees to assist you with the home buying process.
The Different Mortgages
The different mortgage options and conditions can make things a little complicated when you are gearing up to finance a home purchase. Luckily, we make things easier for you by providing a basic understanding of the mortgage types below.
Variable Rate Mortgage
Variable-rate mortgages have interest rates that fluctuate every month. This means that your monthly payments are not fixed and can change with fluctuations in the interest rate.
Standard variable rate (SVR), tracker, and discount-rate mortgages are the three major categories of variable-rate mortgages. You need to be aware your payments will change with this mortgage.
Tracker
Variable-rate mortgages that “track” an external rate—generally the Bank of England’s base rate—are classified as tracker mortgages. This assumes that if the base rate increases (or drops), the mortgage’s interest rate will increase (or drop) as well, which will affect your monthly payments.
The rates provided by this mortgage change, meaning your monthly payments will change.
Fixed-Rate mortgage
Perhaps the most common mortgage type is a fixed-rate mortgage. It is a mortgage arrangement where the fees and interest rates are set at a fixed rate for the term of the loan.
This makes controlling the financial aspects of the home loan a lot easier. Additionally, the mortgage’s term can be tailored to meet specific needs based on financial circumstances and personal preferences.
Discount Rate
For a fixed period—typically two to three years—a discount rate (or discounted rate) mortgage provides a rebate on the lender’s SVR. Since the discount is fixed, the payments will increase or decrease if the lender’s SVR increases, which is generally in line with the base rate. Many people prefer a tracker mortgage that “tracks” the Bank of England base rate as they do not have to worry about the lender increasing its SVR or refusing to pass on any base rate cuts.
Fixed-Rate mortgage
Perhaps the most common mortgage type is a fixed-rate mortgage. It is a mortgage arrangement where the fees and interest rates are set at a fixed rate for the term of the loan.
This makes controlling the financial aspects of the home loan a lot easier. Additionally, the mortgage’s term can be tailored to meet specific needs based on financial circumstances and personal preferences.
Discount Rate
For a fixed period—typically two to three years—a discount rate (or discounted rate) mortgage provides a rebate on the lender’s SVR. Since the discount is fixed, the payments will increase or decrease if the lender’s SVR increases, which is generally in line with the base rate. Many people prefer a tracker mortgage that “tracks” the Bank of England base rate as they do not have to worry about the lender increasing its SVR or refusing to pass on any base rate cuts.
Make An Appointment Today
Our professional mortgage advisers are not biased towards any particular lender, so we will always work within your best interests. You can rest assured that the mortgage we recommend will be the most suitable and cost-effective for you.
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