A mortgage refers to a type of loan taken out by an individual that is used to pay for a property. The property is then used as security against repayments on the loan. A mortgage is used to buy property and is paid back in instalments. If repayments consistently fail to be paid the mortgage provider can obtain a court order to repossess the property in order to recoup their money.
There are several types of mortgage, all of which have different advantages and disadvantages with varying rates of interest available. It has become usual for lenders to offer fixed term discounts and capped interest rates on a mortgage. Mortgage providers usually allow a client to borrow so many times more than their annual income; often three to four times the amount they would earn in a year at variable interest rates. It is however possible to find mortgage providers who will allow you to borrow up five or six times your annual income under certain circumstances.
As UK mortgages are complex it is best to seek expert advice on the right style of mortgage for the needs of the customer. When deciding to get a mortgage in order to buy a property, it is a good idea to begin by doing some research into how much you will be entitled to borrow and how you wish to repay the loan. Some websites will give you a guide of how much you can borrow but it is best to talk to a mortgage broker to get an accurate figure. The amount you can borrow varies according to you salary, as well as other commitments, such as credit cards, loans and so forth.
Once you have found a property you can afford, a solicitor is needed to negotiate terms of the contract on the property with the seller and the mortgage provider. As each mortgage application is assessed individually it is very important to give accurate and truthful information to the mortgage broker, otherwise you may be given the wrong repayment plan which could be financially difficult in the future.
Upon completion of all the legal documents needed to buy the property, and assuming the application for the mortgage has been approved, the mortgage provider will pay the money to the solicitor for use to pay the seller. It is now that repayment of the loan begins, usually at a fixed monthly rate. Monthly repayment plans are something that are discussed with the mortgage provider and repayments are scheduled according to the size of the loan; this is normally for twenty five years, but can be varied with agreement of the provider.
Remember, the property used to secure the loan repayments could be at risk if you do not keep up with the repayments. A recent statistic claims that home repossessions are at an eight year high from missed repayments. As a mortgage is a legally binding agreement, and this is a fact that cannot be stressed enough, the mortgage provider can repossess your home if repayments are not paid. However, a mortgage can always be renegotiated or remortgaged for a better deal
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