What is a Mortgage?
Mortgage can be defined as a loan that is used to purchase a property. Almost all the banks, financial institutions and even specialist mortgage lending companies provide the facility of such loans. When the borrower shifts his mortgage from one lender to another, it is called “remortgage”.
How to choose a mortgage?
As mentioned earlier in this article, mortgage can be given directly by the banks or financial institutions and even a mortgage broker. Depending on your requirement, you can seek advice or get information and avail the mortgage that is best suited for your needs. Who can give me the right advice about the mortgage? All the banks and mortgage brokers will furnish you with information about the products or services – through brochures or even personal meetings. However, this sort of information does not always help you with your specific needs.
It is recommended that you use the expertise of the FSA authorised firms to get information about the mortgage that you are looking for. These professional advices can be bought and in case the product or service does not suit your requirement, you have every right to file a complaint and get a compensation from the firm.
What are the repayment methods?
Mortgages can be repayed in two ways:
► Repayment mortgage or the capital-and-interest loan
► Interest-only mortgage
In this method, you can make monthly payments for the money that you owe along with interest charged on the loan. If you make all the payments regularly, you can pay back the full loan by the end of the mortgage term.
Interest only mortgage
In this model, you make monthly payments but they only cover the interest on the loan; they do not pay any capital. So, you must have alternative payment plans (either savings or may be some other investment plan) to close the loan at the end of the mortgage term. Remember, it is your responsibility to ensure that you have adequate funds to make the payment or else you can lose your home.