Mortgages

Mortgage is a long-term loan which is used for purchasing new property (in most cases the exact property is the house). In case the borrower hasn’t enough money to buy a new house, the lenders provide the mortgage.

The rates are quite low, about 10%-15%. But it’s also possible to find some lenders providing very low rates (8%). The total repayment period may vary from 5 to 35 years. In fact mortgage is most common kind of a secured loan. Your present property is the collateral for the credit, like a guarantor for the purchased property.

Being the most popular debt, mortgage has become the basic way of purchasing the new property for the British nowadays. Actually, it’s one of the most popular ways of buying real property worldwide.

In many cases to apply for mortgage the borrower should be a homeowner. For many lenders it’s a desirable, but not a compulsory requirment.

The borrower should know about some financial traps. There are some risks for the borrowers in case they leg behind in making monthly repayment. The risk is called a foreclosure. In case it’s a secured loan, the borrower can lose the home, because the house may be confiscated to cover the debt. What is worse, there is no special law to protect the borrowers in different emergencies. The lender has all rights to confiscate the house under clause of the agreement.

But fortunately, you won’t lose your home at once. The process of foreclosure is a real long process; you’ll have a special period to cover the debt and to start making regular repayment. But even if you have no possibility to make regular repayments you can sell the house not to lose it. Surely it’s much better to save even little amount of money than to lose all the savings.

The lenders can make mortgage either with fixed or with floating rates (variable rates of interest). Fixed rates help the borrower to budget the income. Variable rates of interest may seem to be more attractive, but if the lender wants to increase the rates, the borrower will have to make much higher repayments. It’s not really gainfully.

Before applying for a secured loan like mortgage, budget your incomes and consult the bank agent or go online and find a special twenty-four-hour financial consultation. Many lenders provide the service. Not to be captured into financial trap, weigh all pros and contras.


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