Residential Mortgages
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Looking for a moving house mortgage can be a daunting task, that’s why here at Your Certified Expert our friendly team are happy to answer any questions you may have.
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With finance being heavily regulated, the advice you receive will be from a certified broker.
A residential mortgage explained:
- A residential mortgage is a loan provided by a bank, building society, or other lender, used to buy or refinance a home.
- The property itself serves as collateral for the loan, meaning the lender can take possession of it if the borrower fails to make the required payments.
- Mortgages typically have long terms, often 25 to 30 years, during which the borrower repays the loan through monthly installments.
- Fixed-Rate Mortgage:
- The interest rate remains the same for a set period, typically 2, 5, or 10 years.
- This provides predictability in monthly payments.
- Variable-Rate Mortgage:
- The interest rate can change over time, usually in line with the lender’s Standard Variable Rate (SVR) or another benchmark.
- Monthly payments can fluctuate, potentially going up or down.
- Tracker Mortgage:
- A type of variable-rate mortgage where the interest rate tracks the Bank of England base rate or another specified rate, plus a set percentage.
- Discounted Variable-Rate Mortgage:
- Offers a discount on the lender’s SVR for a certain period.
- Payments can change, but the rate will always be below the lender’s standard rate for the discount period.
- Offset Mortgage:
- Links your mortgage to your savings account, with interest only charged on the difference between your mortgage balance and savings.
- This can reduce the interest you pay and help you pay off the mortgage faster.
- Interest-Only Mortgage:
- During the term, you only pay the interest on the loan, with the full loan amount due at the end of the mortgage term.
- Often used in specific financial situations and requires a repayment plan for the principal at the end.
- Income: Lenders assess your income to ensure you can afford the mortgage repayments.
- Credit Score: A good credit score increases your chances of getting a mortgage and securing better terms.
- Deposit: Most lenders require a deposit, usually at least 5-20% of the property’s value.
- Debt-to-Income Ratio: Lenders look at your existing debts relative to your income to determine affordability.
- Employment Status: Steady employment or a reliable source of income is essential.
- Interest: The main cost of a mortgage is the interest charged by the lender.
- Deposit: An upfront payment towards the property, which reduces the amount you need to borrow.
- Arrangement Fees: Some mortgages come with an arrangement or booking fee.
- Valuation Fees: Covers the cost of the lender’s valuation of the property.
- Legal Fees: You’ll need a solicitor or conveyancer to handle the legal aspects of buying the property.
- Stamp Duty: A tax on property purchases above a certain value (this varies by country and property price).
- Monthly Payments: These are calculated based on the interest rate, term, and principal. Payments are typically fixed for fixed-rate mortgages or can fluctuate with variable-rate mortgages.
- Overpayments: Some mortgages allow you to make additional payments to reduce the principal faster, potentially saving on interest costs.
- Early Repayment Charges: If you repay your mortgage early, especially during a fixed-rate period, you may have to pay a fee.
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