If you do not know much about mortgages, then it is better to stay away from them unless you know what is the purpose of mortgages and their advantages.

What Is A Mortgage?

A Mortgage is where you take a loan to assist you in buying a home or a property. The property that you purchase will be used as collateral on the loan. If the repayments schedule of the loan is not met, the lender can take over your property and dispose of it to recover whatever is not being paid by you.

Whether the mortgage that you are taking is the first time or a remortgaging, it requires you a lot of work to do. Take a look at what a lender is saying and then compare it with another offer in the market. Chose what is best and fit for your needs.

Two main things for you to consider which require great attention ie. What are the interest rate charged and the mode of the repayment period? These two factors will determine whether you will be able to service the loan until it is fully settled.

The lower the interest mortgage, the lower the monthly repayment will be. A simple equation. You may receive many offers from the lender with different conditions and charges. Don’t get succumbed to the cheap interest rate offer instead you should also look at the other features of the mortgage before accepting any deals.

Apart from the interest mortgage, you have to look at the repayment mode. Normally the lender will offer two options, one is the repayment mortgage and the other one is the interest mortgage.

For the repayment mortgage, the amount that you will be paying is comprised of the principal and interest. This type of repayment will ensure that the mortgage is fully paid by the end of the agreed period.

For the repayment of interest only, the monthly repayment comprises interest charged only. There won’t be any gradual reduction of principal. The principal is normally paid at a certain period which is agreed upon between the lender and the borrower. The principal is usually guaranteed by some maturity of investment in shares of stock. Thus, the borrower must ensure that his investment grows so that he can repay the whole principal by end of the agreed period.

When you are ready to enter into the mortgage you must take into consideration the charges incurred such as the valuation fees, solicitor’s fees, and lender administration fees.

Never rush when looking for a property mortgage as you will be tied yourself to repayments on a long-term basis.