Housing Association Shared Ownership Mortgages
What is a "shared ownership mortgage"?
Getting on the property ladder these days can be tough. A popular method for first time buyers is to buy a property with a housing association using a shared ownership mortgage. In this scheme you would own maybe 25 to 50 percent of the property while the housing association owns the rest.
Whilst paying your portion of the shared mortgage you would also rent the other portion of the property from the housing association. The advantage is that you only need buy a relatively small portion of the property at first if you so choose, but can buy additional shares from the housing association at a later date. This is called “staircasing”. The disadvantage is that you lose a portion of the equity gained in the value of the property to the housing association.
If a shared ownership mortgage sound like the right products for you, fill out our online application and a qualified shared mortgage advisor will contact you to discuss your specific circumstances. It's free, fast and without obligation or credit checks.
A variable rate mortgage is one where the interest rate charged by the lender may move to correspond with changes in bank base rates. If the change is small, it may not be adjusted at all but if the change is more significant then the mortgage rate is far more likely to move.
Base Rate Trackers
Base Rate Tracker Mortgages are relatively new to the market and do not require much of an explanation as they do what they say.
Many lenders are now offering these products at a guarantee to follow the Bank of England base rate plus a percentage margin for a set period.
Self Employed? - Do you do your accounts to minimise your tax or for obtaining potential finance? - I think we know the answer to that!
Have you been self employed for a short period only and don't have 3 years audited accounts? - a prerequisite of many lenders.
Do you need to raise money on your existing mortgage, for your business or any other purpose?
We have a great deal of experience in the Self Employed market, not least because most of us are self employed ourselves and have encountered most of the problems there are to encounter. We are able to arrange "self Certification" mortgages for both employed and self employed people.
A homeowner loan is where your house is used as a guarantee of repayment for the loan otherwise known as "security" for the money you are borrowing. Loans can be obtained by residents in England, Northern Ireland, Wales and Scotland. Applicants must be between the ages of 18-80 years old. You can borrow anything from £5,000 to £100,000 whatever your purpose. Secured homeowner loans
Repaying a Mortgage
We will help you understand the different methods you can use, but in general terms there are two main methods you can consider.
Capital and Interest Repayment Mortgage - With this type of mortgage the monthly payment will include both the lender's interest and an additional amount which will reduce the balance of the loan. Payments will normally be calculated by the lender to make sure nothing is owed by the end of the agreed mortgage term. In the early years more interest is paid each month than capital to reduce the balance. In later years as the balance reduces, the borrower pays less interest and more capital each month.
Interest Only Mortgages - As the name suggests, each month the borrower pays the interest charged by the lender. They do not pay any capital and the loan outstanding does not reduce. Instead, the borrower will usually put in place a regular investment plan, pension, Personal Equity Plan etc to run the same term as the loan. This plan should be designed to generate sufficient funds to repay the loan at the end of the term. Endowment policies are probably the most popular and common investment plans but pensions and other savings vehicles can be used.. A borrower should check what guarantees apply to the investment plan and, where the final outcome cannot be guaranteed, ensure they regularly review its performance to make sure it will clear the loan on time.
Paying a mortgage off early (Redeeming mortgages)
Although a mortgage is expected to be a long term commitment, many people find they can pay their loans off well in advance of the agreed loan term. This most often occurs because the borrower moves home.
A borrower must understand what early repayment penalties, if any, will apply should they clear their loan early. It is common for lenders to claw back the value of discounts or cash backs if a loan is redeemed in the early years and fixed rates usually carry early redemption penalties for at least the period of time the rate is fixed, sometimes longer.
Many lenders make their loans "portable" which allows the borrower to transfer their existing mortgage amount and terms when they move and avoid the redemption charge. However, this will usually mean that they must still meet the status requirements of the lender when they move and there may be disadvantages if they need to borrow more or less than the original loan balance. It should also be noted that all mortgage products are not portable
If a borrower is unable to continue their regular mortgage payments for any reason, their home is put at risk of repossession by the mortgage lender. Loss of income due to sickness, accident or redundancy are the most obvious reasons why a borrower my not be able to be able to keep up repayments. Recognizing this, we are able to offer insurance to protect a borrower in these circumstances. State funded support for mortgage borrowers who suffer a loss of income has been greatly reduced in recent years and it is therefore strongly recommended that all borrowers consider taking out such protection.
First Time Buyers
For first time buyers, entering the property and finance arena for the first time can be a daunting prospect. With so many types of mortgage products, repayment methods and additional insurances to think of, it can be a confusing time.
We are able to provide a fully comprehensive service to First Time Buyers and guide them through the process from choosing their property up until they move in.
We have an unparalleled range of specially tailored products taken from the entire market place ranging from 100% schemes to products which can help you on to the property ladder even if you have experienced credit problems in the past.
Many Lenders are now offering variable rate mortgages where the borrower can choose to overpay each month underpay each month or even take a payment holiday for an agreed period. In effect the borrower can use the equity in a property as a capital reserve. In some cases a lender will provide you with a cheque book that enables you to draw down the reserve funds.
These products require careful consideration and it is recommended that potential borrowers discuss this type of product at length with First Stop Mortgages to make sure that they understand all the implications before entering into any agreement. It is worth bearing in mind that when the borrower reduces payments or takes a payment holiday, the amount not paid will probably be added to the outstanding loan and this may mean higher payments in the future. When a borrower chooses to overpay on their mortgage they will speed up the repayment by reducing the balance outstanding.
Fixed Rate Mortgages For UK Home Buyers
What Are Fixed Rate Mortgages?
Fixed rate mortgages are the most common type of house-buying loan, where the payments and interest rates remain the same, no matter what happens. Interest rates may increase, and other bills may also get bigger, but your payments towards your mortgage are constant. This means that you can settle your budget far in advance, knowing that your mortgage rates will remain fixed. If you have any additional items, such as house insurance, this may go up and down as money rates change, but payments of the fixed term itself does not move.
What Does A Fixed Rate Mortgage Involve?
The fixed rate mortgage will involve a set number of payments over a number of years. There are a few options available, such as a 15 year loan, up to 30 years being the most common. The fewer years involved, the higher the payments made but the less interest that is accumulated. There are also options where you can pay 'biweekly', in which you can pay half the monthly sum every two weeks; this amounts to 13 months' worth of payments, thereby shortening the life of the mortgage.
Reason for Why Pick A Fixed Rate Mortgage
Many people feel more comfortable with a fixed rate mortgage, as it is a fairly stable monthly payment, and this makes budgeting for the amount easier to do. There is also comfort in the knowledge that there won't be any surprises when the bill arrives, and neither will you be hit with any extra sums at the end of the year. Fixed rate mortgages also allow you to 'overpay', or clear off more of your loan sooner, to a certain percentage each year, and do not charge. This can make the customer feel more in control of his money.
Where Can Fixed Rate Mortgages Be Found?
Most banks and building societies will have one, if not several, fixed rate mortgages available. They will have a number of different versions of this mortgage because there are made 'additions', options and services that can be put into the mortgage to make it more suitable to the client. As well as all these options, the booming mortgage industry now means that there are independent advisors, private mortgage brokers, and independent loan services who will all be happy to provide you with their selection of fixed rate options. There are now plenty of Internet sites where advisors, brokers and even the mortgages themselves can be found.
The Risks of Fixed Mortgages
Just like any other kind of loan, the fixed rate mortgage has some problems. Firstly, it is not available to high-risk clients, and anyone who cannot provide proof of earnings will be unwelcome; however, there are other options for them. The other risk is the amount of time it will take to clear the mortgage. A 30 year mortgage will probably cover the whole of the client's working life, a constant monthly payment that can only be paid off early by accepting a heavy 'charge' for breaking the contract. However, if you are looking for a stable mortgage in a world of unstable mortgage rates, then a fixed-rate mortgage is worth looking in to.
Fixed rate mortgages have their interest rates set for a certain period of time, which can be from one to ten years, after which time the rate will revert to the variable rate.
Generally speaking, the shorter the term of the fixed rate mortgage, the lower the interest rate and vice versa.
Fixed rate mortgages have become very popular over the years due mainly to the vast changes in interest rates we have seen.
A fixed rate mortgage can give peace of mind because the borrower knows exactly what their repayments will be over a period of time.
One disadvantage is that, should you decide to move your mortgage or re-mortgage during or shortly after the fixed rate period, you will normally be subject to early redemption penalties which can be equal or more than the benefit you have received.
Looking for a Fixed Mortgages 2 - 25 years!
With Fixed rate mortgages this means you know where you stand with your monthly repayments during the fixed rate period, whatever happens to interest rates in general. This enables you to budget with confidence. Nationwide can offer a range of fixes ranging from 2 year to 25 years.
As the mortgage market is so competitive, many lenders offer discounted rates for both purchase mortgages and people remortgaging to them.
Discounts are normally 1% or 3% off the lenders standard variable interest rate and can last for a period from one to three years.
When there are base rate changes the discounted rate still changes but will still reflect the discount originally given.
One disadvantage is that, should you decide to move your mortgage or remortgage during or shortly after the discount period, you will normally be subject to early redemption penalties which can be equal to or more than the benefit you have received.
Many lenders have been offering cashback schemes to attract potential borrowers. Cashbacks are cash incentives to new borrowers ranging from a few hundred pounds up to £10,000. If you are attracted to a cashback scheme, beware of any hidden penalties on early redemption of your mortgage. There are some lenders offering combined discounted rates with cashbacks or fixed rates with cashbacks.
Capped Mortgage Rates
A Capped Mortgage Rate operates exactly like a fixed rate except the interest rate can fall in line with standard variable rates should they come down below the agreed "cap". As with a fixed rate mortgage, the borrower is protected from sharp or unexpected rises in payments but has no risk of losing out should interest rates fall. The borrower should be cautious of very low, short term capped rates as they are unlikely to see variable rates trigger a decreased payment and they will potentially suffer a payment shock when reverting to the Lenders standard variable rate.
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