When getting a mortgage there are a few things people should know because getting one is a very big deal. Read on to find out some information about mortgages.
Types Of Mortgages
It is very important to know the different types of mortgages available and the difference between them all. There are four basic types available. The four basic types of mortgages available are fixed rate, capped rate, discount rate and cashback. Read on to find out more about these.
A fixed rate mortgage is when the interest rate will stay the same for a certain length of years, usually between 5-10 years but can also be just for 2,3 or 4 years. Short fixed rate mortgages tend to be much more popular than long term ones because long term fixed rates mortgages are usually more expensive.
A capped mortgage is when the interest rate cannot go above a certain number but it can still be adjusted, just as long as it doesn’t go over the number that has been set as the cap. Capped rates will typically cover a period of 2,3,4 or 5 years, similar to what a fixed rate will cover. You can use a mortgage calculator like the one here to help you work it out. payday loans
A discount rate loan is when there is a reduction in the rate. It will be for a set period, which will usually range from 1-5 years. A good example would be if a person got this type of loan, they would receive around a 2% reduction in the standard variable rate.
Finally, a cashback mortgage is when a person will give a certain amount of money as a percentage of the loan. The percentage will usually be 5%. It is kind of like a down payment for the loan.
The Typical Mortgage Process
Lenders will usually charge their clients a valuation fee. The fee that will be charged will depend on who the lender is, as some lenders charge a higher valuation fee than other lenders. Once the lender receives the fee they will use it to pay for a surveyor. The surveyor’s job is go out to the property and determine whether or not the property is worth enough to cover the loan.
A buyer needs to keep a few more things in mind though such as the surveyor’s job does not require them to perform a full survey, and because of this they may not find underlying problems with the home. Since this is the case there is no contract between the buyer and the surveyor, and this means that a buyer cannot take the surveyor to court if the buyer later on discovers an issue with the house that they believe that the surveyor should have detected.
However a buyer may be able to pay an extra fee and the surveyor could do a building survey of the property. The fee amount will also depend on who the lender is.
Other Information About Mortgages
Another thing that people want to keep in mind when they want to get a mortgage is that many lenders will want references. This means that a person may have to get written references from their employer and maybe bank. However if a person is self-employed, then they will need to get a written reference from their accountant. A person may also be required to get a written reference from their landlord. Lenders also want to make sure that a person has a reputation for paying their bills, so they will typically run a credit check on a person.
Where To Apply For A Mortgage
A person has a few options when it comes to where they can go to apply for a mortgage. A person can go directly to the bank and apply for a mortgage. This is a good option because somebody from the bank can help them fill out the application and help them understand the application.
A person can also try to get a mortgage via online. The best thing about doing this is that the progress of the application can easily be tracked as soon as the application has been completed.
Getting a mortgage does not have to be hard but understanding what types of mortgages are out there and how to apply for them is very important. Contact us at your earliest convenience if you would like a mortgage quote or an equity release.
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