If you are dreaming about buying a house in UK, you should definitely know about mortgage. It’s one of the most popular forms of finance which is available to people all over the world. There are numerous companies that offer mortgages for people and there is also need for lenders to provide loan to customers easily. To know more about mortgage, read below detailed information.
The UK does it better. No, that’s not true. Not in most of the things we do. There is just too much emphasis on the “British” side of things. When I think about the UK, I don’t picture a dark, green and pleasant land full of beautiful parks and castles or some such thing – yet sometime recently someone asked me what mortgage is in UK? So here’s a short overview of what mortgage in UK really means.
In a nutshell, mortgage is a loan that you have to pay back in installments. It covers the amount of money you borrow and covers the most common expenses like home, vehicle, education and health care etc. To buy property in UK, you need to raise funds through bank loans. On the other hand, if you have already built your house then you can save a considerable sum of money and make big profit by selling it later on.
Types of Mortgage in UK
The following is a list of the most common types of mortgages in UK. They are listed from the most common to least common.
Lump Sum Mortgage – This type of mortgage is for those who have saved up enough money for their home and want to buy it outright. The borrower agrees to repay the entire amount, which means there is no interest and no monthly payments.
Fixed Rate Mortgage – This type of mortgage has an interest rate that remains fixed throughout the life of the loan. This means that if you take out a £100,000 fixed rate mortgage, your interest rate will remain at 5% and you will pay around £660 per month over the course of 25 years.
A fixed rate mortgage is one that has an interest rate which stays the same for the duration of the loan. This can be beneficial if you are planning on staying in your home for a long period of time and don’t mind paying off your mortgage early. It is also popular because it gives you security knowing that your monthly payments won’t change too much over time.
It is important to note that fixed rate mortgages are usually higher than variable rate ones because they lock in your rate for longer periods, meaning you will pay more interest overall over time. If you want to know more about fixed-rate mortgages, we have written an article on them here: https://www.themortgagecompanyuk.co.uk/fixed-rate-mortgage/
Variable Rate Mortgage – These mortgages have an interest rate that changes regularly, based on a number of factors such as inflation and economic growth, but it is usually higher than what you would pay on a fixed rate mortgage at the start (which can be lower than market rates).
Conventional mortgages – These are the most common type of mortgage in the UK. They are fixed-rate mortgages that have a fixed interest rate for the duration of the loan. The minimum amount you can borrow with a conventional mortgage is £25,000 and maximum is £200,000.
Adjustable rate mortgages (ARM) – These types of loans offer borrowers some flexibility over their interest rates by allowing them to adjust their monthly payments up or down according to changes in interest rates and other factors such as job loss or increase in income. The minimum amount you can borrow with an ARM is £25,000.
Repayment Type Mortgages – there are two types of repayments on repayment type mortgages: standard and trackers. The standard repayment mortgage has a fixed amount of interest deducted from your salary each month; this is known as a prepayment penalty (or APR). Trackers allow you to choose how much interest you pay on top of this fixed amount each month; this can be done in two ways – either by opting for an investment-style tracker that invests your money into shares or funds as part of its arrangement with you or by choosing a “flexible” tracker where no extra payments are made until certain conditions are met