The types of mortgages available in the UK

There is a huge array of options available when it comes to choosing the type of mortgage you want to go with. Mortgage types are split into two types in the UK. You can either choose a repayment mortgage or an interest only mortgage.

The latter type would see you only repay interest applied to the loan which would mean you are never actually paying back the principal sum borrowed so while your monthly payments may be lower you are not repaying the debt so it will take much lower to pay back the whole loan. Therefore in the long run when interest is taken into account you will actually be repaying a lot more to the mortgage lender.

The second option is to go with a repayment mortgage. This will mean the monthly payment to the mortgage lender will repay part mortgage loan and part interest. Therefore as you are clearing more of the mortgage each month your overall debt will be cleared sooner and at a lower cost. The obvious disadvantage is that your monthly payments will be much higher so you should take this into account when choosing a mortgage type.

A mortgage broker would be able to advise you on this and most would work out the deposit you need as well as workout your monthly repayments so you can compare how much you would be repaying to the mortgage lender each month.

In the current economic climate affordability is a major factor when taking out a mortgage. When choosing which mortgage type to go with, it is important to ensure you can make the monthly repayments but also ensure that the mortgage is of the best value to you. Most mortgage brokers will search the whole of the market, using their services will mean you can find the best deal for you. Mortgage rates are changing more frequently than ever as the Bank of England changes interest rates in its attempt to turn the economy around. It may be better to hold off until mortgage lending rates improve. Mortgage brokers can go through the different types of mortgages to ensure you are prepared when you do decide to take out a mortgage.

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Understanding Mortgages and Choosing the Best One to Suit Your Needs

Mortgages are extremely handy financial devices which many homeowners take advantage of these days. They allow individuals to finance their home which provides them with other benefits as a result thereof. For example, by obtaining a mortgage on the home, the homeowner can pay off their house little by little and still have enough money left over each month for other pertinent living expenses. The mortgage is a wonderful tool which individuals should consider if they are interested in financing the purchase of a home. Prior to signing loan documents, one should have a firm grasp of the different types of mortgages so that they are able to choose the best one for their needs.

Fixed Rate Mortgages

Fixed rate mortgages are one type of mortgage that is available to homeowners. The fixed rate mortgage is set for a certain number of years at a particular interest rate. Therefore, over the life of the loan the homeowner will know exactly how much they are paying in principal and how much they are paying in interest. The interest of the loan will not change during that time period. This is a good type of loan for those who are uncertain as to what the future interest rates will be and wish to lock in a good rate right in the beginning. In addition, homeowners like fixed rate mortgages as they will always know just how much money they need to put aside each month in order to pay the mortgage on their home.

Adjustable Rate Mortgages

Another type of mortgage which many homeowners express an interest in is that of the adjustable rate mortgage. With an adjustable rate mortgage, the interest rate on the loan will fluctuate depending upon how the market is doing at that point in time. Therefore, an individual's monthly payment can vary when the interest rate is either increased or decreased. There are a few different pros and cons associated with the adjustable rate mortgage.

As for the positive aspects of the adjustable rate mortgage, a homeowner may be able to reap the benefits of a favorable interest rate and therefore pay less than they normally would had the mortgage been fixed. Secondly, individuals may be able to start out their mortgage with a low interest rate right in the beginning which is an appealing trait to many.

For those who look at the negative aspects of adjustable rate mortgages, they may discover that the interest rate hits a high level and stays there for a while which means that they have to pay much more each month than they did in the beginning. Also, adjustable rate mortgages can be unpredictable by nature and those who are on a set budget may worry that the rates will be too high for them to handle down the road.
Which Is Better?

When deciding which one to select, homeowners must determine whether they want a sure thing or whether they want to take a chance that their interest rate will be favorable throughout the life of the loan. In the end, it is up to the homeowner to look at their current and potential future financial state in order to make an informed decision whether to go with a fixed rate mortgage or adjustable rate mortgage.

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Bad Credit Mortgages Can Be A Life Saver

Having bad credit does not necessarily mean that one has to be ignored for a bad credit mortgage. Almost anyone with a bad credit is eligible to avail a mortgage. This of course will depend from each lending company to another. There will be some disadvantages of taking a bad credit mortgage. They may have higher interest rates, and also higher fees.

While trying to avail a bad credit mortgage the consumer must also compare all the interest rates before taking the plunge. It would also be a good idea to wait for a while and check if one is able to clear the existing credit before applying for the second mortgage, if they have one. It is also important that the lender understands the situation of the consumer, else there might be too much pressure for the repayment.

To ensure this relationship, the borrower can always explain the situation to the lender and tell them what happened, so that the lender will have a better understanding of why the consumer is approaching him. It would help a great deal if the borrower also had a small amount of savings in his bank account, so that he may be able to pay at least the first three installments on time.

Exploring legal issues is always a must when it comes to bad credit mortgage. First the consumer must make sure that he is allowed to cancel the loan within three days of applying, if he does not want it. The borrower must also ask for all the option details much before signing all the papers. There could also be options to request the lender for special options.

Spending a little time doing research for the comparison of rates, is a must as there could be chances that the borrower is missing out on something. Today there are many online options, and also ways of finding out which is the best lending company to approach. One must also not allow the lender to take advantage of them just because of the bad credit history.

The state of the bad credit can be actually improved with the mortgage, as at least this time by paying the installments on time it will give the consumer a chance to improve his credentials. Asking the lender to keep track of the repayment is also a must, as this can go into the credit history records. Through the bad credit mortgage one can also pool the debt into one channel and be free from several creditors’ harassment.

It is always a better option to choose a bad credit mortgage, but must also make sure it is on the right track, so that there will be no room to declare bankruptcy. There is no need to even stay with such a mortgage for a long period with fixed rate interest. The borrowers can opt out of this after they have made some regular payments to the lender. The down payment must also be considered when opting for this mortgage.

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