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| Mortgage Overview |
For more info on mortgages please check out the sub-category menu on the right.
A mortgage is essentially a loan where a customer ‘buys capital’, which is an amount of money from a lending institution such as a building society or bank.
The objective of purchasing this ‘loan capital’ is to buy a home. In return for receiving this capital from the lending institution, the customer has to make regular repayments in the future, always monthly repayments, until the capital or loan capital as it is sometimes referred to, is repaid.
Not only does the borrower repay the capital but there is a significant amount of interest to be repaid over the term of the mortgage. The amount repaid in the early stages of the mortgage is usually interest repayments and the loan capital borrowed does not decrease significantly until the latter stages of the mortgage.
It must be noted you can either take out a annuity mortgage which is subject to the APR interest rate of the day or a fixed interest rate mortgage, which has higher repayments but does not fluctuate, more importantly, rise over the term of the fixed rate. Fixed rate mortgages are available from one to ten years and each rate is different.
For example, you can have you can have a 20 year mortgage with the first 5 years at fixed rate. You shall always know where you stand regarding repayments over these 5 years. At the end of the 5 years it goes back to the APR rate of the day and you can then decide if you want to get the fixed rate of the day for a further time span up to you or just leave it at the current APR rate.
Contact a mortgage broker by clicking here: HERE.
In basic terms the ‘loan capital’ borrowed to fund the purchase of a home is called a mortgage. In reality the term ‘mortgage’ has a different legal meaning from the common interpretation.
Technically the word mortgage is used to describe the asset, which is used as security for a loan, rather than being a descriptive word for the loan itself. Therefore if an asset is being used as security for a loan, the asset will be mortgaged by the borrower to the lender for the duration of the loan.
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