Despite the many different loans available in the today, a home loan is becoming more and more popular with homeowners who wish to raise capital by utilizing the growing equity in their homes.
A home loan is a cheap and flexible way of raising capital for a wide variety of reasons from home improvements to purchasing a car. A home loan can even be used to get us out of a financial crisis, which most people experience at some point in their lives.
A home loan is a secured loan using the mortgaged property as security with the lender. Securing the home loan against the property minimizes the risk to the lender should people default on repayments, as the lender can take legal possession of your home. With this in mind, the emphasis here then is to ensure that you will be able to meet the monthly repayments on the home loan as your property is at risk. The plus point is that interest rates offered on a home loan are generally much lower than other types of loan due to the reduced risk factor to the lender. The amount of home loan does of course depend on the equity you have in your home and other factors such as income.
A home loan is an excellent way of borrowing for those who do not wish to sell their home and for those who may or may not have a bad credit history. As mentioned previously, a home loan can be used for any purpose, including home improvements, which could increase the value of your property, thus increasing the equity in your home even further.
So, after considering all the options, it couldn’t be easier to obtain quotes for a home loan in the comfort of your own home just by switching on your computer and pressing a few buttons. You will find that terms and conditions and interests rates vary from lender to lender for a home loan, so weigh up all the pros and cons before applying for a home loan and remember that your home is at risk if you do not keep to the terms of the home loan.
Showing posts with label Home loan. Show all posts
Showing posts with label Home loan. Show all posts
Saturday, December 6, 2008
Home Loan | In simple terms
In its simplest and most easily identifiable form a home loan is borrowing money using property as a security, or a loan secured upon a property it lives in the family of loans and is a type of secured loan. The most known use of a home loan is a mortgage used to purchase a property.
A home loan allows you to borrow a large amount of money in order to buy a home or property which is secured against the value of that property subject to the lenders terms and conditions, you agree to pay the mortgage amount back to the lender at the end of a specified term.
As the home loan is secured on your property then your home may be at risk if you do not keep up with the payments on a loan or or mortgage secured on your property.
A home loan mortgage can be broken down into four main parts:
Capital – This is the total amount of the loan that you borrow.
Interest – This is the charge for borrowing money. Worked out as a percentage of the capital.
Term – This is the period of time that the money is borrowed over, and needs to be repaid by.
Repayments – These are the regular payments you make throughout the term of the mortgage.
The home loan mortgage is created by a legal charge on the property. The charge is noted by the land registry on your deeds and confirms that the property has been pledged to the lender as security for the mortgage loan.
Home loan mortgages are repayable normally with a term from 5- 25 years although some lenders will allow the mortgage to be over a longer term. The total amount that you borrow is called the ‘capital’, and you will also have to pay back capital and the interest charged to you by the lender.
The title deeds are held by the lender but when the purchase monies are paid over to the vendor, usually through a solicitor, the mortgagor becomes the owner of the property. The legal charge is supported by a loan agreement between the two parties which sets out the terms of the loan, the responsibilities and undertakings.
You have two options - repay the capital and the interest together within your monthly mortgage payment - this is commonly known as a ‘repayment’ mortgage, or you could just pay each month the interest to the lender ‘interest only’, and put in place an investment vehicle to build up enough capital money to repay the lender in full at the end of the term.
When looking at how much money a lender is willing to let you borrow, there are two factors to take into account.
First of all, they will want to know what single or joint income you have, most lenders will work on income muliples and these vary from lender to lender. A rough guide is three times a single salary or two and three quarter times a joint salary. Most home loan mortgage lenders have the same or similar multiples they use but shopping around will ensure you get the best available mortgage multiple.
Most lenders will also take into account the amount that you are looking to borrow, and the total value of the property, along with your credit status and employment type.
Ensure that you have fully decided how much you can afford per month. You need to fully consider how much money you have coming in, and how much money you spend each month. This will give you an idea how much you can afford to pay a lender each month for your mortgage.
You should also consider whether your income is actually enough to be to afford the property and the mortgage you are after. We all would love to live in the best house possible but we have to work within our budget. A mortgage and the purchase of a house are the largest and normally the longest commitment we normally have , remember 25 years is a long time to be paying that mortgage. Getting a mortgage can be complicated affair. If you are unsure about which mortgage to go for, then you should seek some financial advice.
A home loan allows you to borrow a large amount of money in order to buy a home or property which is secured against the value of that property subject to the lenders terms and conditions, you agree to pay the mortgage amount back to the lender at the end of a specified term.
As the home loan is secured on your property then your home may be at risk if you do not keep up with the payments on a loan or or mortgage secured on your property.
A home loan mortgage can be broken down into four main parts:
Capital – This is the total amount of the loan that you borrow.
Interest – This is the charge for borrowing money. Worked out as a percentage of the capital.
Term – This is the period of time that the money is borrowed over, and needs to be repaid by.
Repayments – These are the regular payments you make throughout the term of the mortgage.
The home loan mortgage is created by a legal charge on the property. The charge is noted by the land registry on your deeds and confirms that the property has been pledged to the lender as security for the mortgage loan.
Home loan mortgages are repayable normally with a term from 5- 25 years although some lenders will allow the mortgage to be over a longer term. The total amount that you borrow is called the ‘capital’, and you will also have to pay back capital and the interest charged to you by the lender.
The title deeds are held by the lender but when the purchase monies are paid over to the vendor, usually through a solicitor, the mortgagor becomes the owner of the property. The legal charge is supported by a loan agreement between the two parties which sets out the terms of the loan, the responsibilities and undertakings.
You have two options - repay the capital and the interest together within your monthly mortgage payment - this is commonly known as a ‘repayment’ mortgage, or you could just pay each month the interest to the lender ‘interest only’, and put in place an investment vehicle to build up enough capital money to repay the lender in full at the end of the term.
When looking at how much money a lender is willing to let you borrow, there are two factors to take into account.
First of all, they will want to know what single or joint income you have, most lenders will work on income muliples and these vary from lender to lender. A rough guide is three times a single salary or two and three quarter times a joint salary. Most home loan mortgage lenders have the same or similar multiples they use but shopping around will ensure you get the best available mortgage multiple.
Most lenders will also take into account the amount that you are looking to borrow, and the total value of the property, along with your credit status and employment type.
Ensure that you have fully decided how much you can afford per month. You need to fully consider how much money you have coming in, and how much money you spend each month. This will give you an idea how much you can afford to pay a lender each month for your mortgage.
You should also consider whether your income is actually enough to be to afford the property and the mortgage you are after. We all would love to live in the best house possible but we have to work within our budget. A mortgage and the purchase of a house are the largest and normally the longest commitment we normally have , remember 25 years is a long time to be paying that mortgage. Getting a mortgage can be complicated affair. If you are unsure about which mortgage to go for, then you should seek some financial advice.
A guide to home loan
In the world of finance today there are many times the name home loan is mentioned, but what exactly is it? Well it can cover a range of loan types, it can mean a mortgage that can be used to purchase a property. Another type of home loan is a remortgage, where you can raise extra money for home improvements, debt consolidation or other purposes.
These could include getting a better rate or improving the terms of the home loan that you already have in place. Another type of the home loan category is a secured loan, this is effectively a second charge on your property that sits behind the mortgage on your property and again allows you to raise money for home improvements, debt consolidation, refinancing or even buying a new car.
With most home loans they will allow you to raise capital for any purpose and these could, as well as those mentioned above, include the deposit or capital towards a property in the sun, a caravan, or even a second property to let out.
Home loans can be useful at many times, from a remortgage and getting a better rate, or using some of the growing equity in your home to take out a secured home loan, raising capital to consolidate existing debts or carrying out those always wanted home improvements.
With the majority of homes seeing an increase in their value, the home loan is exactly that - a loan that in the main is secured on your home. With the home loan being secured on your property there is of course a risk, as with your mortgage, that if you do not keep up with the payments your home is at risk and could be repossessed. But don’t let this put you off the idea of home loans, for the majority of people are aware of the risks and never experience any problems with their home loan.
The market is growing for home loans and the best place to carry out research on them is here on the internet, you are only a click away from the world of finance and it was one of those clicks that brought you here. Many high street lenders offer home loans of all types. There are lenders that can offer you a home loan if you have an impaired or an adverse credit rating or have had financial problems in the past. As your home loan is secured on your property the lender feels less at risk as he has your property as security.
Ensure you get the best home loan quotes by applying or getting as much information as you can from 2 or 3 home loan lenders. If a deal looks too good to be true it probably is but you never know, Make sure the home loan that you take out fits all your home loan needs, is over an agreeable term with repayments you can comfortably afford, as a home loan is normally over a 5-25 years term.
These could include getting a better rate or improving the terms of the home loan that you already have in place. Another type of the home loan category is a secured loan, this is effectively a second charge on your property that sits behind the mortgage on your property and again allows you to raise money for home improvements, debt consolidation, refinancing or even buying a new car.
With most home loans they will allow you to raise capital for any purpose and these could, as well as those mentioned above, include the deposit or capital towards a property in the sun, a caravan, or even a second property to let out.
Home loans can be useful at many times, from a remortgage and getting a better rate, or using some of the growing equity in your home to take out a secured home loan, raising capital to consolidate existing debts or carrying out those always wanted home improvements.
With the majority of homes seeing an increase in their value, the home loan is exactly that - a loan that in the main is secured on your home. With the home loan being secured on your property there is of course a risk, as with your mortgage, that if you do not keep up with the payments your home is at risk and could be repossessed. But don’t let this put you off the idea of home loans, for the majority of people are aware of the risks and never experience any problems with their home loan.
The market is growing for home loans and the best place to carry out research on them is here on the internet, you are only a click away from the world of finance and it was one of those clicks that brought you here. Many high street lenders offer home loans of all types. There are lenders that can offer you a home loan if you have an impaired or an adverse credit rating or have had financial problems in the past. As your home loan is secured on your property the lender feels less at risk as he has your property as security.
Ensure you get the best home loan quotes by applying or getting as much information as you can from 2 or 3 home loan lenders. If a deal looks too good to be true it probably is but you never know, Make sure the home loan that you take out fits all your home loan needs, is over an agreeable term with repayments you can comfortably afford, as a home loan is normally over a 5-25 years term.
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