Home Mortgage Loan

Buying a home is the largest financial undertaking that most of us will experience. Since it is rare to be able to afford a property outright, taking out a home mortgage loan is seen as the standard way of purchasing a property. A home mortgage loan is a financial product, whereby you agree to borrow a fixed amount of money from a mortgage lender for an agreed period of time. Based on the amount that you would like to borrow, and the money that you yourself are able to put up for the sale of the property, the lender calculates a rate of interest that you must pay on top of your home mortgage loan. In many cases, the mortgage lender offers an introductory interest rate for a certain number of years, followed by interest at their standard variable rate (SVR), which is unique to that lender.

Your home mortgage loan payments would happen monthly, and you can choose to either pay back some of the money borrowed each month plus the interest (‘repayment’ home mortgage loan) or you can just choose to pay back the interest, and then pay the full balance owed at the end of the mortgage term (‘interest-only’ home mortgage loan). You should only choose the second option if you have savings that you are planning to use to pay back the home mortgage loan, or if you have an investment scheme running alongside the home mortgage loan. Otherwise, with the expected rise in house prices, you will find yourself unable to pay back the full sum at the end and may therefore lose the property.

Speak to a qualified home mortgage loan adviser today!

Home Mortgage Loan: The Basics

• The amount of interest that you will have to pay on your home mortgage loan depends on a number of factors, including the amount of money that you wish to borrow, the length of time for which you would like to take out the home mortgage loan, and the amount of money that you have available to put towards the property.
• The lender has a series of home mortgage loan products in the market, where they will quote a certain interest rate for a particular ‘loan-to-value’ or ‘LTV’. The LTV is the amount that you wish to borrow, as a percentage of the total purchase price of the property.  For example, if you wished to buy a house costing £100,000 and had a deposit of £20,000, you would need to borrow £80,000 from the lender giving an LTV of 80%
• Think carefully before choosing to repay only the interest each month, because the sum of money that you actually owe will not get any smaller.  If you are unable to pay back the full value of the home mortgage loan at the end of the mortgage term, the lender is able to sell the house in order to reclaim the money that they lent you.  You should speak to a qualified mortgage adviser before making any final decisions.