Mortgage guide

For many people, the word “mortgage” means practically nothing that actually makes sense, and for this reason they may find that it is a bit of a struggle to understand the... >>>more

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Mortgage guide

For many people, the word “mortgage” means practically nothing that actually makes sense, and for this reason they may find that it is a bit of a struggle to understand the financial aspect of owning a house, and to know exactly how they can make sure that they have chosen the right product for their needs. With this being the case, before you visit your Mortgage advisor Paisley based it is great to get some information about mortgages in general – and this guide will give you everything that you need to get started.
 
What is a mortgage?
 
A mortgage is a loan, but a very specific one that is for the sole purpose of buying property. Unlike other loans which are only taken out over the short term, a mortgage will run to a length of anything up to 35 years, with 25 being the average term length. The loan that you take out is against the property that you have purchased with the money, and this means that if you are not able to make the payments that you have agreed on, your lender will have the right to repossess your home and sell it as a way to get the money that they are owed.
 
How the amount lent is calculated
 
One of the main things that a borrower will be concerned with is how much money you will be able to afford to pay back on the loan that you take out. There are a number of things that will be taken into account in this respect, and the main one is the amount of money that you earn each month. Not only this, but they will consider any other outgoings that you might have, for example if you have children, as this helps to give them an idea of the money that you actually have spare each month that you could use to spend on your mortgage repayments.
 
Where you can get a mortgage from
 
Usually, a mortgage is given by a bank or building society, but if neither of these options are suitable for your needs then you may choose to opt for a mortgage broker Paisley based as an alternative. By the time you go to apply for your mortgage you will be asked about how much you will need to borrow from the lender, and the term that you would like to borrow it over. You will also need to know the type of mortgage that you would like to have – although if there is any doubt then lenders will usually be able to offer some advice in this respect.
 
What types of mortgages are there?
 
There are two common types of mortgage that you will be able to choose from when you apply, and these are repayment and interest only. The former will be paid off in full by the time that you reach the end of your loan, whereas with the latter you will only have paid off the interest on the amount that you borrowed. Where this type of mortgage is taken out, there is an expectation for you to have other plans in place about where the money will be raised to pay off the loan at the end of the term, and your lender may ask to see some proof of this.
 
The stages of application
 
When you apply for your mortgage, there may be two stages that you need to go through in order to get everything in place. The initial stage will deal with your lender working out exactly which product is right for you, and this is the stage at which you will find out just how much they might be prepared to lend. This is also the point at which you will find out everything that you need to know about the various products that they offer.
 
The second stage of the process is where the application actually begins, and your lender may ask for detailed information about your financial situation and how the mortgage could impact on it in the future. At this point, an official offer will be made, which means that you will know the exact value of the property that you are going to be able to buy.
 
How the deposit size affects the mortgage
 
Although many people believe that it is easier to have as small a deposit as possible as it is quicker to save up, this might not be the case. Many lenders have varying interest rates, and the rates for people with larger deposits can often be much more reasonable than those for people with smaller deposits. This is all to do with the perceived risk that the lender feels when granting the mortgage application. A borrower with a larger deposit to put down is thought to be a lower risk than somebody who has only managed to save the minimum amount that they need for the mortgage to go ahead.
 
Different rate mortgages
 
There are two types of mortgage when it comes to the interest rate that you will pay – fixed rate and variable rate. Fixed rates can be good for those wanting to know exactly how much they are going to be spending each month, whereas the variable rate can change depending on the Bank of England base rate at any time. Which one brings the best deal overall is very difficult to predict, so it is more about the individual’s own financial situation at the time.
 
Ultimately, when you consider the fact that a mortgage is more than likely going to be the biggest loan that you ever take out, it makes a lot of sense to try to get as much information as you can before you choose to sign for the loan. Making the right decision is the best way to ensure a positive long term impact on finances, so it is certainly worth putting in the effort early on and making sure that you choose the product that best fits your needs.
 

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Mortgage Broker Paisley
Phone: 01414130635
Address:
Sir James Clark Building, Abbey Mill Business Centre,
Paisley, PA11JS
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