Purchasing your home may be the biggest purchase that you make. Most of us are unlikely to have the money just lying in the bank, so a mortgage is the usual way to purchase a property. A mortgage is simply a loan that is secured on a property. This means that if the loan payments are not made, the lender has the right to recoup their money from the property. Mortgages are usually issued by building societies and banks but there are also specialist mortgage companies. While the most mortgages are available direct to the public, there are certain mortgages that are only available through mortgage advisers or financial advisers. A mortgage company will only lend to you if they believe that you have sufficient income, so that you can afford the monthly mortgage payments.
Residential Mortgages: Here the lender will base the amount that they lend you on your earned income; this can be your salary or your self-employed earnings. Generally, they will ask you to provide proof of your income. You are not normally allowed to rent a residential mortgage without the lender's permission.
Buy to Let Mortgages: This is an alternative type of mortgage, which can be used only for properties that are rented. Here the rental income is used to justify the loan amount. The idea is for the mortgage payments to be paid for by the rent. Some lenders will require the borrower to have a minimum income and others will not lend to people who do not own their own property.
Offset Mortgages: This is a relatively new type of mortgage, where the mortgage is linked to a current account. No interest is paid on the current account but the borrower will effectively reduce the mortgage loan by the amount in their current account. Thus reducing the interest on their mortgage. As no interest is paid on the money in the current account, there is no tax. These accounts are very attractive to higher rate tax payers, who either have significant savings and/or have relatively large amounts moving through their current accounts. Generally, the interest rate on an offset mortgage will be higher than with other mortgages but if used properly, it can be used to save thousand of pounds off the mortgage and to repay the mortgage early. These mortgages are very flexible and often have features, such as "payment holidays".
Conveyancing: The legal part of a mortgage usually starts after the mortgage offer has been obtained. This is where all the legal checks are performed. The costs can vary considerably. As this is a very important part of the process, it is essential to use a reliable conveyancer. You can obtain quotations and ratings from a selection of conveyancers by pressing the button below.
Your home may be repossessed if you do not keep up repayments on your mortgage.