Mortgages - The Inside Story
by: David Wood
Getting a mortgage to buy a property (or a remortgage to get a better deal on existing property) is not easy. Mortgaging is a complex process and will always involve some professional services and advice.
At a minimum you will require a solicitor to handle conveyancing and title of the property, you may also use a mortgage broker or advisor and even perhaps a property consultant and/or surveyor (in addition to the surveyor acting on behalf of mortgage lender).
For some, particularly first time buyers, dealing with all these "experts" can seem daunting. So lets examine some of the basic issues regarding mortgages and remortgages to better prepare you.
A mortgage is simply a "home loan", basically a type of secured loan using the property as security for the lender. To protect themselves lenders will need to know how much property is worth just in case they have to sell it to recover the mortgage (i.e. if you fail to make mortgage repayments), to establish rough property value lenders will instruct a home valuation survey.
Using the valuation recieved from survey report lenders can establish the loan to value (LTV) they are willing to offer. Loan to value is a basically the percentage of the value of the property up to which they are prepared to lend, for example, if a property was valued at ?100,000 and the mortgage lender was happy to lend at 75% LTV, this means they will allow you to borrow a maximum of ?75,000 towards cost of property purchase, with the balance remaining (?25,000 in this case) to be the deposit.
The lenders decide on the LTV available using various criteria, firstly by checking your previous credit history, the "cleaner" the credit profile the higher the LTV available. So, for example, for someone unlucky enough to have been through a bankruptcy or other severe credit problem the lenders may be willing to lend up to 70% LTV, but for a couple with impeccable credit they may be happy to lend up to 110% of property valuation.
Secondly they have to assess your ability to repay, the way this is normally achieved is by using income multiples, for instance if you earn ?25,000 gross per annum, some lenders will stipulate that they will lend a maximum of 3* income (in this case ?75,000 irrespective of property value).
Basically the credit checks assess the probability of you repaying the mortgage while your income is used to assess ability to repay. For more information see http://www.fm-money.co.uk.
About The Author
David Wood To check out all finance articles by this author please go to http://www.fm-money.co.uk/archive.
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Adjustable vs Fixed Rate Mortgages
Adjustable vs Fixed Rate Mortgages
by: Max Hunter
Mortgage rates can either be fixed for the duration of your loan or can be adjustable. An adjustable rate mortgage is a loan that is set up with an interest rate that changes based on pre-determined criteria, primarily tied to the federal interest rate. If the interest rates are up, then your interest rate on your loan will be higher, if the interest rates are low than the interest rate on your loan will go down.
Adjustable rate mortgages (ARM) are generally fixed interest rates for a period of time and then become adjustable. Generally speaking the introductory interest rate for an ARM loan will be lower than a fixed rate mortgage. This is done in order to lower initial payments and allow people to take out larger mortgages, or give them smaller payments for the introductory period. This is attractive to people who may know that their income will be increasing over that period of time.
Whether...
Adjustable vs Fixed Rate Mortgages
Mortgages > Adjustable vs Fixed Rate Mortgages
HELOCs and Second Mortgages: Which One Should I Choose?
HELOCs and Second Mortgages: Which One Should I Choose?
by: Mark Lambie
Whether you need some extra cash to pay off some credit card debts, or to make some home improvements, home equity lines of credit or second mortgages can be great ways to get started.
Many people looking to borrow money often opt for home equity line of credit, or HELOCs, for short.
They are a tempting first choice, because they can often give you the much needed cash at a low interest rate.
Another advantage to taking out an HELOC, or a home equity line of credit, is that they may provide the borrower with a certain tax break, but you would need to verify this with your lender or accountant.
One drawback to HELOCs, however, is the fact that borrowers are expected to put their homes up as collateral.
So, it is important that you think this decision through, before finalizing the loan, because you may be at risk of losing your home-...
Mortgages > HELOCs and Second Mortgages: Which One Should I Choose?
Mastering the Mortgages Maze
Mastering the Mortgages Maze
by: Gay Redmile
So...you're about to buy a property and need a mortgage...
Where do you begin?
Whether you are a first home buyer, have bought and sold several times, are re-financing, seeking an equity loan, or even a reverse motgage - there are a lot of thing to consider...
Do you choose fixed rate, variable rate, adjustable rate - or interest only.
Rates, fees, costs - can all vary.
Let's have a look at the differences:
Fixed Interest Rate -
usually fixed for the life of the mortgage, say 15-30 years, regardless of increases or decreases in market rates.
This type of mortgage is ideal for those on a budget - as you always know what your repayments are.
Adjustable (Variable) Interest Rate - this type of mortgage allows the interest rate to be adjusted according to the current market rates -usually adjusted at the end of pre-determined periods.
These...
Mortgages > Mastering the Mortgages Maze
Mortgages: What You Need To Know
Mortgages: What You Need To Know
by: Marvin Jones
A mortgage is legal agreement or contract that says that a party has agreed to put up a property, a house or a piece of real estate, as security to get a loan. By doing this, the person getting a loan can buy a piece of property that he initially cannot afford. Still, if by any chance, he cannot pay for the loan, the bank will have to foreclose the property and resell it to others.
The lender will hold the title of the property until after the full amount of the loan is paid for plus interest. Depending on the terms of the loan, repayment can last until a couple of years. Two of the most common mortgages in the country are the fixed-rate mortgage and the adjustable-rate mortgage.
As shown by the name, fixed-rate mortgage has an interest rate that stays the same all throughout the life of the loan. If for example the loan is termed for 10 years, then the interest rate will stay...
Mortgages: What You Need To Know
Mortgages > Mortgages: What You Need To Know
Mortgages - The Inside Story cosmetic surgery
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Cheap Faux Wood Blinds - An Alternative to Wooden Blinds?
Cheap Faux Wood Blinds - An Alternative to Wooden Blinds?
by: Rene Knops
A cheaper alternative to wooden blinds are Faux Wood blinds. They look like wooden blinds but differ from them for obvious reasons. Cheap faux wood blinds are made of vinyl or a combination of wood and vinyl. They are becoming very popular.
These cheap faux wood blinds are nearly fifteen percent cheaper than wooden blinds. Still they provide the look and feel of wooden blinds. ...
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Mortgages > Cheap Faux Wood Blinds - An Alternative to Wooden Blinds?