Phones and telecomunications costs

All About Mortgages

If you want to buy a house then almost certainly you will need to get a mortgage. What is a mortgage? Put simply it is a long term loan on a property using the property as collateral for the loan. The lender is given certain rights rights over the property until you pay off the debt.

Many years ago, probably in your parent's time, mortgages were hard to come by. The building societies were about the only place most people could get a mortgage and they were restricted by the funds they had available. You would apply for a mortgage and just hope that, assuming they approved you and the property, they had enough money left to lend you. Each months lending would often be used up in the first couple of weeks of each month so it was a little bit of a lottery as to whether you got the funds or not..

Times have changed and there are now hundreds of potential lenders eager to lend you money. Each lender will have their own idea of an ideal customer and the nearer you are to being that ideal customer the more likely you will get a good deal on your mortgage. Interest rates can vary a lot depending on the property you are buying and on your financial record and current situation.

There are several different types of mortgages and you should understand what you are taking on before you sign on the dotted line.

The original, and straightforward, repayment mortgage has been around since mortgages began and still has advantages for it's flexibility and simplicity but there are various other alternatives which you might wish to consider.

The other main type is the Interest Only mortgage which requires only that you repay the interest on the loan each month. The capital part is to be paid when the mortgage finishes. There was a time when endowment insurance was a popular way to arrange to make the final capital payment but following failures in fulfilling expectations of how much money would be available at the end of the endowment period they have fallen out of favour. Homebuyers now use investment only mortgages as a cheaper way of getting on the housing ladder and hope that their other investments and/or the rise in house prices will enable them to pay off the capital sum when the time comes.

There are several other types of mortgage for special situations such as Buy-To-Let, Let-To-Buy, remortgages and also several variations within each type.