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A mortgage is a
legal document pledging property as security for the payment of a
loan. It is a formal document, which proves the legal claim on your
property that the lender holds as security for the money you borrowed.
There are two people involved in a mortgage, you and the lender. However,
if you do not pay the debt as agreed the lender, through a court proceeding,
can force the sale of your property to pay off your debt.
An interest only mortgage is where the repayments are set against
the
interest on the loan only, so only the interest is being paid. This
means
that by the end of the mortgage term, the capital originally borrowed
is
still outstanding. Borrowers are advised to make regular payments
into an investment policy, such as an Endowment mortgage, an Individual
Savings Account (ISA) mortgage or a pension mortgage, to pay off the
balance. This type of mortgage usually works out cheaper because only
the interest on the loan is being paid. However, at the end of the
mortgage term, if you do not have enough savings to pay off the balance,
you risk losing your home. It is also worth noting that this type
of mortgage is preferred if you intend to move home, as it is usually
not dependent on staying in the one home,therefore it can work out
cheaper in the long run.
A repayment mortgage is one where the borrower pays the amount of
capital borrowed plus the interest on the loan. This is the most straight
forward type of mortgage, as borrowers know exactly what they are
paying back - the amount borrowed plus interest. If you intend to
move home with this type of mortgage, you will most likely have to
arrange another mortgage with a term of 25 years or so, in order to
keep your payments affordable. You usually do not require to have
an additional investment policy for this type of mortgage, so are
not investing in the stock market.
A flexible mortgage is one where you can vary the payments you make
from month to month. For example, if your income is changeable, if
you receive bonuses regularly, if some months you have a higher expenditure,
you can choose to pay less or more to your mortgage. With other mortgages,
you can incur a charge for this. A flexible mortgage is more suitable
for some people; however, the mortgage lender will have a minimum
payment arrangement is adhered to. |
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MORTGAGES
THE OVERALL COST FOR COMPARISON IS 8.9% APR
The rate is variable and based on a usual case, including fees
of £2,200.
The actual rate available will depend upon your circumstances.
Ask for a personalised illustration.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON
YOUR MORTGAGE.
LOANS
SECURED ON YOUR HOME
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS
ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
12.8% APR Typical Variable
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