The Various Kinds of Mortgages

Author: Jason Jones | Posted: 23-02-2008 | Comments: 0 | Views: 2 |

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If you are looking to buy your own home you need to get a mortgage to finance the deal. A mortgage is a type of loan that is usually spread over 25 years, although shorter and longer term mortgages are available. This loan then is repaid in monthly instalments which are arranged by whoever a person takes their mortgage out with. The house is yours as soon as you have your mortgage in place, however once your final instalment has been paid you will then get the deeds to your house. This means that you legally own the house outright.
Why are there so many types of mortgages?
There are various types of mortgages such as repayment, interest only, endowments and bad credit mortgages. Depending on your circumstances you will get a mortgage to suit yourself. There is no right or wrong mortgage and what is good for one person is bad for another, it is down to the individual to decide what is the best for them.
Different types of mortgages
There are many different kinds of mortgages and here are some of them on the market..
• 100% mortgage – these are mortgages where the lender gives the borrower the entire amount of the house, this is good if you have no money to put down. As well as 100% mortgages there are also 75%, 80% and 90% ones. The plus points of a 100% mortgage is that you don’t need to provide a deposit, however as you are borrowing 100% of the cost of the house you may find that the repayment term is longer and the payments are higher.
• Capped – this is where the monthly mortgage amount is capped at a certain price. If the interest goes above this price you will still only pay the capped amount, and if it falls you pay less. A capped mortgage is a very good if you want to know exactly how much you will be paying for your mortgage each month. However, there are not many lenders who will offer this type of mortgage.
• Endowment mortgages – this type of mortgage pays off the interest on the loan and is supposed to pay out a lump sum at the end of the loan period which should be enough to pay off the outstanding balance. Unfortunately this rarely happens and as a result these are not very popular today.
• Repayment mortgages – these are one of the most popular kinds of mortgage. With a repayment mortgage the interest and capital is paid off with a person’s monthly mortgage payments. This means that at the end of the loan the house being mortgaged will belong to the person who has taken out the mortgage. Repayment mortgages are ideal if you want to pay off your mortgage in full within a given timescale. Payments on these however can be higher than other mortgages.
• Bad credit, or sub prime mortgages – if a person has a bad credit score such mortgages may be their only option. Sub prime mortgages are becoming more commonplace today as the number of people with a bad credit score is increasing. Plus points for bad credit or sub prime mortgages are that they enable people who may have had a difficult time financially get on the property ladder. As a result though the payments will be high and so will the interest rate as borrowers are classed as being a risk. If the payments are made on time it is possible after a while to switch to a better mortgage.
With so many types of mortgages available it really is wise to do as much research into them as possible before opting for any particular one.

Bankruptcy Mortgages - Get a Mortgage After Bankruptcy Discharge

Author: IC | Posted: 17-02-2008 | Comments: 0 | Views: 1 |

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In today’s world, bankruptcy mortgages are not uncommon. According to figures from the government’s Insolvency Service, in quarter three of 2007, there were 26,072 individual insolvencies in England and Wales. This was made up of 15,833 bankruptcies and 10,239 Individual Voluntary Arrangements (IVAs) – where you are still unable to borrow but you keep your property.

All of these people could be candidates to apply for bankruptcy mortgages. However, seeking out a bankruptcy mortgage at a time when you are clearly the most financially vulnerable is nothing to be taken lightly. That’s why it’s very important that you seek advice from an independent broker that specialises in this bankruptcy mortgages first, like The Mortgage Broker Limited (TMBL).

Why would I need to look at bankruptcy mortgages?
After you have been made bankrupt, you may be discharged (freed from obligations under the bankruptcy order) after one year, although a bankruptcy will stay on your credit file for at least six years. Your credit file is held (but not determined) by one of three credit reference agencies in the UK; namely Experian, Equifax and CallCredit and lenders will refer to this file before agreeing to lend to you. Bankruptcy mortgages can be your only option during these years as mainstream lenders – that don’t offer bankruptcy mortgages – will not offer you a loan. Unfortunately, this is still the case if the bankruptcy occurred through no fault of your own; for example, your business folded or you got divorced.

How do bankruptcy mortgages work?
Bankruptcy mortgages are also known as ‘heavy subprime’ mortgages. In other words, they fall at the bottom end of the subprime spectrum; by contrast you could be at the top of this spectrum if you had just missed a couple of credit card payments.

What’s the difference between standard and bankruptcy mortgages?
The main point of difference between standard and bankruptcy mortgages is their cost. Depending on when you were made bankrupt and under what circumstances, bankruptcy mortgages can be eye-wateringly expensive – to the point where it may not make sense to get one. This is the kind of information a broker that specialises in bankruptcy mortgages can help you with. The other main difference is that – as you are a maximum risk in the eyes of the lender, bankruptcy mortgages may require a larger deposit than on mainstream deals, as well as come with some hefty upfront fees and restrictive tie-ins.

Where can I get bankruptcy mortgages?
Even if you wanted to search for bankruptcy mortgages yourself, you may find that many of the specialist lenders that offer them only accept applications through a mortgage broker. This is because lenders must be very careful to protect themselves when it comes to bankruptcy mortgages, and taking an application through a specialist broker like TMBL means the risk has already been assessed and the relevant information has been packaged appropriately. So, when it comes to bankruptcy mortgages it makes sense to go to a broker for access to deals and well as to get the best one available.