|
|
|
|
|
|
 |
|
|
|
|
Posts Tagged ‘types’
|
|
|
|
|
Just as there is more than one type of mortgage loan, there is more than one type of mortgage repayment. If you are thinking about buying a home, you need to know up front how you would like to repay your mortgage.
There are two basic repayment options. First, there is a “Repayment Mortgage”. This sort of mortgage allows you to repay a tiny part of the actual loan each month while also paying the interest.
Monthly mortgage payments on a repayment mortgage are high, comparatively speaking. On the plus side, when you make your last payment you are really making your last payment.
One of the negative things about this kind of mortgage is that the monthly payments can increase. If insurance or taxes increase, this will translate to the mortgage holder needing more money from you in order to pay these things. Fortunately, any increases are usually minimal.
The second type of mortgage is an “Interest Only Mortgage”. This type of mortgage requires you to make payments on the interest every month. The problem here is that once the term of the loan is up, you will still owe the entire amount of the original mortgage.
The way most people make this work is by opening a savings account or some other type of investment account. They will make monthly payments into this account while making their interest only payments, too. This way, at the end of the term, ideally they will have enough to pay the original mortgage in full.
This is much more risky than a repayment mortgage. There are many variables which cannot be predicted or controlled.
For example, if you invested in the stock market in order to cover your mortgage loan and your investment lost money, you would not have enough money to pay your mortgage. This is commonly referred to as a shortfall.
In the past, interest only mortgages were very popular. In recent years, though, they have lost much of their appeal. So many people have lost money in various investments, they are reluctant to take any more chances with any money they have left.
The type of repayment plan you should choose will depend on your specific set of circumstances. There really is no right or wrong decision. Assess your situation, consult a mortgage broker if you feel the need, and make an informed choice. Having all the information is the key to being comfortable with your choice.
Tags: mortgage, repayment, types, uk
Posted in Uncategorized| No Comments »
|
There are so many types of mortgages on the market today; it is easy to understand why a person could get confused. Below is a list of some of the more common types of mortgages that are currently available.
1) 100% Mortgage—this type of mortgage allows a borrower (usually a first time borrower) to borrow the entire amount need to purchase a home. In most cases, a substantial down payment is unnecessary for this loan.
2) 125% Mortgage—this loan would allow a person to borrow 90% or the property value and an additional 25% with no security, for use toward costs associated with home ownership. In the current economic climate, this loan is virtually unavailable.
3) Graduate Mortgage—a specialized mortgage for recent UK graduates. Qualification requires the borrower to have graduated within the last seven years and to have been employed for at least one year.
4) Islamic Mortgage—this mortgage is only given to members of the UK’s Muslim community and is compliant with Islamic Law, which forbids giving or receiving interest.
5) Equity Release Mortgage—a mortgage taken against one-half of your property, given to the borrower in a lump sum, payable at the time of the mortgage holder’s death. This mortgage usually requires the property to be sold in order to repay it.
6) Poor Credit Mortgages—Mortgages given to people who have a bad credit history or no credit history at all.
7) Green Mortgages—mortgages given to allow someone to build or buy an eco-friendly property.
 Self-Certified Mortgages—made available to people who are not able to verify their income. This would be for someone who is self-employed, for example.
9) Commercial Mortgages—Loans given to help someone purchase a commercial property.
10) Off-set Mortgage—A mortgage which enables the borrower to pay interest on the net amount of the loan instead of on the initial amount.
As you can see, there are a number of types of mortgages to choose from. The UK mortgage system is vast and will likely enable nearly anyone to obtain a mortgage. Whether you are a student, young family, first time homebuyer, or small business owner, there is a mortgage to suit you.
If you are shopping for a mortgage, you should probably get in touch with an independent mortgage broker. This broker will be able to help you navigate the choppy waters of selecting the right mortgage for your needs.
Tags: list, mortgage, types, uk
Posted in Uncategorized| No Comments »
|
All loans can be broadly classified into two main categories, Secured and unsecured loans.
1. SECURED LOANS – these loans are the ones which are ‘secured’ against an asset that one owns. In these loans you need to offer collateral against the loan like your house. Example if you secure a loan against your house and fail to pay back in time, the bank will foreclose your house and take its money back. Some examples of secured loans are mortgages, car loans, home equity loans, any recreational vehicle loans etc.
2. UNSECURED LOANS – these are the loans which need not be secured against any asset or where collateral arrangements do not exist. These loans are provided on the basis of ones credit status and ones ability to payback and many other factors. Some examples of unsecured loans are student loans, educational loans, personal loans, credit cards loan.
A secured loan is usually offered at a lower interest rate compared to unsecured loan.
3. Other than these, banks can lend money in different ways too, like line of credit, where you are subjected to a maximum allowable balance and can borrow from the line of credit up to the maximum, every month.
4. REVOLVING LOAN – a revolving loan is the one where you have an uninterrupted source of credit up to a predestined credit limit. You can repay all the credit at once or a part of it at the time of your choice. The interest is to be paid on the borrowed amount for the time it is borrowed. The repaid amount can also be re-borrowed in case it is needed. Hence a revolving loan is always available.
5. INSTALLMENT LOAN – loans with a fixed repayment schedule are called installment loans. The repayment time and amount is fixed before hand. The option to borrow the repaid amount is not available in case of the installment loans.
6. FIXED RATE LOAN – A fixed rate loan is the one where the rate of interest charged is fixed for the entire duration of the loan. These immunes a person from any fluctuations in the interest rates and hence is advantageous.
7. ADJUSTABLE RATE LOAN – an adjustable rate loan is the one in which the interest rates vary in line with the standard rate. This standard or benchmark rate is mostly the Prime rate which the US Treasury charges . Since the rates are in line with the market so in case the interest rates decline, so does your cost and vice-versa.
Each type of loan serves an explicit purpose depending upon your need and situation.
Tags: borrow, loan, money, types
Posted in Uncategorized| No Comments »
|
The UK has a very different system then the USA when it comes to mortgages and the various types associated with them. They offer 4 different types of mortgages instead of 10 like the USA offers. We will discuss each type as we go along in this article.Expanding the Discussion on Mo
Fixed rate mortgage. This mortgage is a set interest rate for the length of the mortgage. These tend to be good until about the 5 year mark. After that they get a lot more expensive. They are available from 1 year to 10 year mortgages. The major downfall of these is that they have serious early repayment fees. These are considered to be the least popular types of loans due to the added fees and consequences of paying it off early.
Capped rate mortgage. This is where one’s mortgage is set to not exceed a certain interest percentage rate. These types can be very effective to not increase one’s payments in drastic measures. Sometimes banks employ the usage of collars. This is the minimum rate that it will allow for these types of mortgages. These are normally offered in the same time periods as the fixed rates mortgages.
Discount rate mortgage. This means that over a period of time, one would receive a discount of a set percentage rate. Evidently, this type of mortgage tends to be extremely confusing for the customers. This can be shown as a step cycle that can change over the lifetime of the mortgage or as a flat discount margin. If one is confused by this type of mortgage, it is best to seek professional help to avoid any complications.
Cash back mortgage. This mortgage allows for a lump sum to be paid back of the advancement. In other words if one is allotted 5% percent cash back, then one will receive monies at the rate of that 5%.
All of these types of mortgages can be obtained from the local banks or credit unions in the UK. Since these require some financial knowledge, it is best to shop around and figure out exactly what you will need in the long run. As with any mortgage it is imperative that one understands all of the legal terms and even read the fine print. That fine print will disclose any early payment fees and penalties.
Tags: discussion, mortgage, types, uk
Posted in Uncategorized| No Comments »
|
The UK is has a large variety of loan available for consumers in need of money. Broadly, these loans are offered as secured or unsecured loans and are similar to the ones offered in the US. We will touch base on a few of these types of loans. Some include high interest rates and added fees to each loan while some have a very tight time frame to repay such loans.
The personal loan is a short term way to ease the overspending of people in these times. These tend to have higher interest rates and shorter loan terms. These loans can be used for paying bills, buying that essential item you have always wanted, or even to just add a cushion to your bank account. One of the biggest things that one can do to make sure they are getting the best possible deal is to research the loan. Also comparing loans might uncover added fees in one that the other doesn’t have. This can save you thousands in the long run when it comes to repaying it. These can be very tricky to obtain and payment wise.
The next popular type is the auto loan which this is normally obtained through a car dealership. Some dealerships have working partnerships to enable the best rates for the buyer. What happens here is the car dealer contacts the bank and either approves or disapproves the buyer. The terms for these types of loans is anywhere from 1 year to 6 years. This is a loan that one can shop around for, but most of the time it is best to ascertain from the specified dealer. These banks have had a long standing relationship with the dealer and sometimes can push through a loan that normally would be denied. There are many different companies that offer these types of loans. Some even specialize in bad credit loans as well.
One of the largest loan types offered in the United Kingdom are student or education loans. This are mainly available to enable students to get an education and repay upon graduation. These loans are normally obtained through the financial aid department of the college or university. Sometimes not enough money is granted and the parents may take out an additional loan to help defray the out of pocket costs. These loans can be done for a very short term or over the long road of 10 to 20 years. The only downfall with these is that they do not fall under normal guidelines for regular loans.
There are so many loans available to everyone in the UK that finding the right one might just be a click away. Researching and comparing each loan offer and company is a good way to make sure one is getting what they need and or want.
Tags: loan, types, uk
Posted in Uncategorized| No Comments »
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Alliance.co.uk 2006 -2009 All Rights reserved
|
|
|
|
|
|
|
