Mortgages. Domestic mortgages, commercial mortgages, bridging mortgages, what is a mortgage. Basically it is the conveyance of a property as the security to pay back a loan. We all need mortgages for different reasons. Here in the UK renting your own property is looked down upon and so everybody aspires to have their own mortgage. In Europe people tend to rent more so the mortgage market is not so prolific. In some areas of Portugal the property prices are so high that when people die they pass on the mortgage not the property! Mortgages come in all shapes and sizes. First time buyer mortgage. 100% mortgage. 95% mortgage. Mortgages linked to pensions. Re-Mortgages to raise money for various things. Off set mortgages to pay it off early. There are so many mortgages to choose from but there is always one to suit you and your circumstances. Do not be put off if you have been turned down for a mortgage there are lots of them out there and we can help find the right mortgage for you. The thing you must remember about any mortgage, second mortgage or loan secured on your home is that it can be at risk if you do not keep up with the repayments.
The Different Types of UK Mortgages
Mortgages allow a person to purchase property without having the money in their bank account. Instead the bank is going to lend money to the borrower for collateral. With mortgages you are purchasing either land, commercial property, or a home. Since there are different types of mortgages there are different guidelines for getting the loans. The rate, information needed, and the type of collateral will change. Most often the collateral is the actual property you are purchasing. The bank holds the title to the property until the mortgage has been paid off. Below we are going to look at the different types of mortgages to help you discover the best one for your needs.
A commercial mortgage is going to be on property that has a business purpose. If you are purchasing an office building or land to build a business on you need a commercial mortgage. The commercial mortgage works differently than housing mortgage. First of all with a commercial mortgage your personal information is not important. The loan is based on the business and what the business can make that year. There are other types of commercial mortgages such as repairing, expanding, or buying an existing business. The longer the business is open the more willing the bank is because it is seen as a lower risk.
Shared Ownership Mortgages:
A shared ownership mortgage is a percentage of the home. Instead of taking out a mortgage for the entire property the person taking out a shared mortgage will come up with a partial amount of the deposit and mortgage price. Usually shared ownerships are 25 to 50 percent of a property. There is not a lot of equity in this option, but it is a great option for first time home buyers who can’t afford a lot. The shared ownership mortgages are going to vary between lenders. It is important to view all options when making a choice.
A tracker mortgage is another great option if you are hoping to save a little money. In a tracker mortgage the interest rate charged is going to be tracked by the base rate at the Bank of England. There is a cut off amount for how much the interest rate can fluctuate when the Bank of England changes. So for example if the base rate is lowered then the interest rate on your mortgage will lower. If the base rate increases the mortgage lender can increase your interest rate.
Fixed Rate Mortgages:
A fixed rate mortgage is going to have an interest rate that is the same through the life of the loan. A fixed rate mortgage can be for 2 to 40 years depending on you and the lending company. The longer you hold the fixed rate the better.
Variable Rate Mortgages:
A variable rate mortgage has a changing interest rate like the tracker mortgage, only the variable rate can change every six months and is not always regulated by the base rate of the Bank of England.