A mortgage is a loan that is specifically given to someone who wants to purchase a property. When you take out a mortgage, you are taking out a loan in which the property you purchase can be used as a security for the company that is lending to you. The idea is to borrow a large sum of money, which you then pay back with interest over a set number of years.
In some cases, you may be able to choose between paying off some of the capital of the loan, and the interest that accumulates on that time, or simply paying the interest and using another form of income to pay for the amount that is owed at the end of the mortgage.
When you are considering a mortgage loan, you will need to think about a number of important factors, including how much you can realistically afford to borrow, how long you want to borrow that amount for, and whether you want to invest in an interest-only, or repayment mortgage – or you’d like a combination of both. You will also need to consider the period of interest deal, and the economic climate that you are getting involved with, as this will have an impact on your decision if you are considering a tracker mortgage.
Mortgage Loan Options for First Time Buyers
Today, there are plenty of fantastic options available for buyers who are on the market for real estate for the first time. Many mortgage lenders are willing to offer special deal to first-time buyers, for instance, mortgages that are recent graduates working within the public sector. In some cases, lenders will also help with valuation and legal fees, and waive the arrangement fees that would otherwise be expected.
If you are a first-time buyer with a particularly low budget, then you may also consider opting for a shared-ownership scheme as a way of getting yourself onto the first step of the property or housing ladder. As a first-time buyer, you will need to make sure that you have both a good credit score, and a good deposit to ensure that you can get a mortgage loan. Remember that it is a good idea to check on your credit report before you apply for your mortgage overall.
Buy to Let Mortgage Options
In some cases, it is possible to get buy-to-let mortgages that usually only require you to pay the interest on a particular property. The idea is that you can use the rental income of the property that you own to cover the interest payments that you owe and pay off the capital when the property is sold. You will need to have a bigger deposit for a buy to let mortgage than you would with a traditional mortgage, and the lender will usually insist that the rent you ask for is at least 125% or more of the mortgage costs.
Remortgaging Deals: What Might be Available?
Sometimes people find themselves in search of a remortgaging solution. If you have owned a property for a long period of time, and have a good credit record with significant equity in your property, then you should find that there are a range of deals out there that could save you money when you switch your mortgage lender.
One important thing to remember is that if you are considering your remortgaging options, you will first need to find out how much it might cost you to change your lenders. For instance, if you are currently paying on a fixed-rate deal then you may have to pay out a penalty charge for a few months. On the other hand, you may also be required to pay specific valuation and legal fees – though some lenders will refund these amounts eventually.
When you take out a mortgage, remember that you need to pay various costs such as valuation and legal fees and many lenders will charge an arrangement fee to make sure that the mortgage is secured. If you have a fixed rate mortgage then you may also have to pay early repayment penalties made up of several months’ worth of interest if you want to end your mortgage before the set time. Some lenders will also charge exit fees if you choose to switch out to another lender.
Bad Credit Mortgage Options
Remember, the credit crisis today has meant that it is more difficult than ever before for people struggling with debts and bad credit records to get the mortgages that they want. Whether you can get your hands on a mortgage loan or not will often depend on your specific circumstances, and how large of a deposit you have to place down – as well as what your current credit problems are.
You may find that if you have bad credit, you can still get a mortgage deal, but you will have to pay a much higher interest rate, or put down a much larger deposit.