Mortgage Loans

Mortgage Loans

A mortgage loan is different than any other loan you will get in your lifetime. 

Most mortgage loans are negotiated for a set time period of less than 10 years. They are negotiated for a single interest rate which will remain in place for the entire term of the mortgage loan. (The only exception to this would be a line of credit, in most cases. The interest rate on a line of credit may be changed over time.) Generally, you can pay off a loan in full at any time, although you may pay a penalty depending on the mortgage lender. 

Most of us are familiar with this kind of loan through the purchase of our vehicles. 

With mortgages, the length of the mortgage, the term of the mortgage and the mortgage interest rate are negotiated separately. In this case:

• the 'amortization' of the mortgage is the length of time it will take to pay off the mortgage
• the term refers to the time period covered by your current mortgage contract. This is normally the length of time that you are 'locked in' to a particular interest rate and payment amount.
• the interest rate can either be fixed or variable.

MORTGAGE LOANS
    Amortization
    Term
    Interest rates
    Saving Money

Tags: Mortgages/Mortgage Lenders/Mortgage Brokers/Home Mortgage/Loans/Loan Lenders/Mortgage Refinancing/Mortgage Companies/Mortgage Quotes/Mortgage Tips

Comparing Mortgages(1)

Comparing Mortgages


It's a Buyers Market. Shop Around 

There are hundreds of companies offering over 4000 different mortgages, which means there's a lot of competition for your money. 

It's what's called a buyers market so you're in a stronger position to shop around than you may think. 

The worse mistake you can make is to think "I'm not worthy" and grab the first mortgage that comes along. Take your time and shop around. 

Of course the lenders traditionally give the impression that they're doing you a favour by even considering little old you for such a huge loan. 

The truth is they want you. If they don't seem keen for your business they're probably not doing their jobs. 


Making Comparisons 

Having decided which type of mortgage you want, shop around for the best deal on offer. 

Make sure the comparison is accurate by getting "like for like" quotes from the lenders ie for the same amount borrowed over the same period. 

The most obvious thing to check is the "Headline Interest Rate". But this may be misleading. The real comparison will be in the APR. 

Look at any application fees, the cost of the valuation and survey and so on. 

Tags: Mortgages/Mortgage Lenders/Mortgage Brokers/Home Mortgage/Loans/Loan Lenders/Mortgage Refinancing/Mortgage Companies/Mortgage Quotes/Mortgage Tips

Mortgage Buying Tips (1)

Mortgage Buying Tips


1- Don't take the first mortgage you're offered 
There are big differences in the deals you can get amounting to many thousands of dollars. 
So make sure you've made comparisons with others. 

2- Shop around 
There's a lot of competition between the mortgage providers. 
Like supermarkets they'll use techniques like offering "loss leaders" to lure more customers (Their pay off is that later on you're not likely to go elsewhere because of "consumer inertia" - which we've all got black belts in when it comes to financial products). 

3- Look for a mortgage lender who is offering a "loss leader"
Provided there's no overhanging lock in you could shop around for another good deal at the end of it and save thousands. 
In other words buy with a view to get a new mortgage deal every 2 years or so. 

4- Don't be taken in by a low sounding initial interest rate 
This is known as the headline rate. Very low rates usually come with cunning long term "tie ins". 
What will happen at the end of the low interest rate term? Do you have to stay with the same mortgage lender who is suddenly only offering you a very uncompetitive rate unless you pay a big penalty to leave? 

5- Beware Redemption Penalties
When you take out a mortgage you have an agreement with the lender. This covers the amount you repay and is set for a particular period. 

For example you may have a mortgage for a three year fixed interest rate of 5%. 

If you want to get out of this deal before the three years is up you'd probably have to pay a redemption penalty. This is a charge which supposedly compensates the mortgage lender for the time and expense of your leaving. 

Some lenders may try to hide the redemption penalties in the small print. 

Simply ask your prospective lender what the exit / redemption penalties are. If you're not sure what they mean ask them to spell it out. If you still don't understand you can take it that there's something they might be trying to hide so walk away. 

6- "Overhanging lock-ins"
This is a penalty for leaving a lender AFTER a special deal interest rate has come to an end (ie not DURING the agreed timescale of the deal). 

So, using the same example as above, if you got a mortgage with a three year fixed interest rate of 5% the mortgage lender could charge you a penalty if you left after the three years was up, say in year four. 

How Choose Mortgage ? (1)

How choose Mortgage


One of the most difficult aspects of organising a mortgage is sorting through the four thousand mortgage packages currently available. 

However it's not as bad as it sounds because these are really just variations on a few types of mortgage. 

To simplify things, we suggest you start by deciding which type of mortgage you want. 

The best way to do this could be by deciding which types of mortgages you definitely don't want. 

This process of elimination will help you draw up a shortlist of mortgages that you will bother considering. 

You can then look for a good mortgage lender who's offering the type you want. (You can read more about Types of mortgages now or later) 

While it's quite possible for you to work it all out for yourself you may find it easier to ask an Independent Financial Adviser (IFA), or a mortgage broker, to advise you on the best type of mortgage for your needs. 

HOW CHOOSE A MORTGAGE?
    Comparing Mortgages
    Good vs Bad Lenders
    Mortgage buying tips

Tags: Mortgages/Mortgage Lenders/Mortgage Brokers/Home Mortgage/Loans/Loan Lenders/Mortgage Refinancing/Mortgage Companies/Mortgage Quotes/Mortgage Tips

Mortgage Basics (1)

Mortgage Basics


Strangely enough, the word "mortgage" comes from the French word "mort," which means "dead," and "gage," from Old English which means "pledge". 

According to Sir Edward Coke (who lived from 1552 to 1634), the term came from the doubtfulness of whether or not the mortgagor would pay the debt! In those days, if the mortgagor did not, then the land pledged as security for the debt was taken away. The land was considered 'dead' to the mortgagor. (In other words, as if the person never had it.) 

Nowadays, the term mortgage is commonly used to refer to a loan for the purpose of purchasing a property. We don't associate anyone's death with it! (Although, it might seem as if you might be dead before your mortgage is paid off.) 

Home mortgages are the most common type of mortgage. Very few of us will be in the unique position of paying cash for our home. 

MORTGAGE BASICS    Summary of the rules
    How much can you borrow?
    How do you prove your income?
    How long are mortgages often for?

Tags: Mortgages/Mortgage Lenders/Mortgage Brokers/Home Mortgage/Loans/Loan Lenders/Mortgage Refinancing/Mortgage Companies/Mortgage Quotes/Mortgage Tips

Mortgage Types (1)

MORTGAGE TYPES


Mortgage types and interest rates have more variety than doughnuts. This is the challenging part of shopping for a mortgage. 

We've done this several times. We've probably tried most of the common types of mortgages, from short-term 6-month mortgages (which normally offer the lowest interest rate, but which you have to negotiate the most frequently) to variable interest rate mortgages over a 5-year term. 

Here's what we can say with good authority - your current mortgage rate may not be the best deal you could get. Unless you've gone to your lender with the same kind of steely determination with which you would face a used car salesman, you are likely paying more than you have to. 

This mortgage calculator can help you calculate repayments on your mortgage.

With this in mind, we'll also share what we've learned from the school of hard knocks.

So, pick the type of mortgage that you are interested in from the list below.

MORTGAGE TYPES    Low interest rate mortgage
    Adjustable rate mortgage
    Interest only mortgage
    Assumable mortgage
    Fixed rate mortgage
    Reverse mortgage

Tags: Mortgages/Mortgage Lenders/Mortgage Brokers/Home Mortgage/Loans/Loan Lenders/Mortgage Refinancing/Mortgage Companies/Mortgage Quotes/Mortgage Tips

Mortgage (1)

MORTGAGE


WHAT IS A MORTGAGE?

A mortgage represents a loan or lien on a property/house that has to be paid over a specified period of time. Think of it as your personal guarantee that you'll repay the money you've borrowed to buy your home. Mortgages come in many different shapes and sizes, each with its own advantages and disadvantages. Make sure you select the mortgage that is right for you, your future plans, and your financial picture. 

BUYING A PROPERTY? Buying a house is a very exciting time. The good news is that if you do the legwork and set the right wheels in motion you can be in your own house in a fairly short time. The bad news is that you can expect that there will be lots to do before you get there.

Age Partnership are independent equity release specialists. For more information on equity release, contact Age Partnership.