Buying Guide:
Buying a Property > Mortgages
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MortgagesHelp & Advice Should you require the help or advice of a Financial adviser or Mortgage Broker we would be more than happy to assist with this. We are also able to provide contact details for many other property related services. Whether you require the help of a surveyor, structural engineer, builder or any other professional service. Please see our other services section for more information Choosing a MortgageWhat they are and how to choose one to suit you…… A mortgage, sometimes known as a Legal Charge, is simply a loan secured on the deeds of a property. Because the lender has security against it, the property can’t be sold, given away of leased without their involvement. The mortgage lender also has Power of Sale, which allows them to repossess and sell the property if the payments are missed. Most mortgages are repaid monthly with interest over a period of up to 25 years. Interest rates may be: Variable – The interest rate rises and falls according to changes in commercial lending rates (Usually the Bank of England Base Rate) Discounted - A interest rate lower than the lenders standard Variable rate by a set percentage. This discount is usually for a set period after which the rate will return to the lenders standard variable rate. Fixed – The interest rate is fixed for a predefined period. During this period your monthly payments will remain fixed allowing you to budget accordingly. Tracker – A tracker is a set margin above or below a variable rate but one that is not controlled by the bank of England base rate. Capped – The maximum rate of interest you pay is fixed for a certain length of time, below that it moves in line with a variable rate. Collard, above a minimum rate The most common mortgage lenders are: Building societies and banks, based here or overseas Some insurance companies; Private individuals and ‘family loans’ There are no “standard” mortgage agreements, and the conditions upon which money is loaned, and the rights and remedies of the borrower and lender, can vary tremendously. How to Choose If in doubt, find a good independent Financial Adviser and or Mortgage Broker, who has the necessary qualifications, training and experience. Decide whether you want a repayment, endowment, pension or ISA loan. Don’t choose solely on the basis of the lowest monthly payment. Take a long-term view. Make up your own mind, just because your friends have ISA mortgages doesn’t means its right for you. Stick with mainstream lenders: it’s often better to deal with a friendly, sympathetic local building society or bank manager might be preferable in times of difficulty. Compare interest rates and terms. There’s plenty of information on the internet, and in most broadsheet newspapers. Beware of incentives. Discounts and other schemes often have hidden costs, such as early repayment charges. Monitor your investments. If your endowment plan, pension fund or ISA plan isn’t performing well, take action The role of your Solicitor… We’ll highlight the main features of your mortgage offer, then co-ordinate the financial arrangements side by side with the purchase of your chosen home. At the same time, we’ll usually be acting for your mortgage lender, too, by securing their loan to you against the deeds of your new home. Although it’s a cheap, speedy system, it sometimes puts us in a difficult position, especially if there are title defects acceptable to you but not your lender. Unfortunately, in such cases the CML Handbook standards put the lender’s interests before yours – sorry! Please note we’re not qualified to advise on life policies, investments plans or other related products. Types of mortgage:
ABOVE: Five of the popular kinds of mortgage available – it’s your choice…… Life Assurance There are three basic types, with costs varying according to the amount of cover, your age, sex and health. Term Assurance Life cover or an agreed period of your choice. You may be offered: Whole of Life Insurance for the whole of your life, not just an agreed period Endowment Policy If you survive the agreed term, you get the basic sum assured to pay off the debt plus bonuses. These policies can be: “With Profits” – share in the insurance company’s profits Unit linked – geared to the Stock Exchange value of units trusts Trust policies Although you pay the premiums on a trust policy, any proceeds belong to your trustees, not you. This makes it difficult to cash them in or use them as collateral. However, they can be very useful, as: They’re very tax efficient. You can earmark them for paying Inheritance Tax on death, and they’re no included in your taxable estate, which means more money for your family No claim procedures means no extra stress and worry for your family at an already difficult time So What’s right for you? Our advice is to consult a qualified, experienced and well respected independent financial advisor. If you’re confident, do your own research then get a note from a non-commission paying insurance company. This information has been supplied courtesy of Rix and Kay Solicitors, 84 High Street, Heathfield, East Sussex, TN21 8J. Telephone 01435 865211 |