Mortgage Loan Options - Going Exotic

In the past, a person had limited options when borrowing money for a home purchase. These days, there are exotic mortgage loan options that satisfy just about every borrowing need.







Creative Mortgages







Getting a loan for a home purchase can be very stressful. What if you donย't qualify? How humiliated will you be? These days, thereย's no reason to worry. The mortgage lending market has a solution for just about everyone.







1. Do the Two Step.



The Two-Step Mortgage is a mixed interest rate loan. Essentially, the loan provides a lower fixed interest rate for a period of 5 years or so and then adjusts to a new rate at the end of the period. The new rate is dependent upon the interest rates being charged at the time of the change. This loan can be helpful for borrowers who are squeezing into a loan since the initial period tends to have a lower interest rate than a straight fixed interest loan.







2. Graduated Payments ย- Graduated Payment Mortgages are loans that, well, have a graduated payment schedule.



Depending on the specific lender, the first five to seven years of mortgage payments will be 10 to 20 percent lower than a fixed rate mortgage. After the prescribed time, the payments will actually be higher than a fixed rate loan. The advantage of this loan is two fold. First, it lets you borrow more money than a fixed loan because you can qualify for the lower initial payments. Second, the loan is optimal if you are expecting to sell the house within the initial five-year period after significant appreciation.



3. Sharing Appreciation ย- Shared Appreciation Mortgages are typically provided by private investors and even family members. In essence, you borrow money to purchase a home by agreeing to ย"shareย" a percentage of future appreciation in the home with the lender. Private lenders can want as much as fifty percent of the appreciation, but they will significantly lower the interest rate on the loans. SAMs should really only be used if you have horrible credit and no other options.



There three loan options are only the tip of the iceberg when it comes to mortgages. If you need to get creative, find a reputable mortgage broker in your area and see what they can come up with for you.

What You Need to Know About Mortgages and the Type of Financial Services Available

A mortgage is generally defined as a loan used to finance the purchase of real estate or a home. These loans come in different types, rates and terms. The specifications of these loans are important, for they along with the initial down payment determine the monthly payment amounts due throughout the life of these loans. The right type of loan may depend on individual circumstances. For those seeking to finance or live in a home for only a few years, an ARM loan, or adjustable rate loan could be best.



Those who are looking to stay in a home long term, a fixed rate loan may be best. Those lucky enough to be buying property for the first time may receive the best terms with a first time buyer mortgage. To determine which loan is best, the key concepts of all types of mortgages should be examined.



The most common type of mortgage is the conventional home loan. Conventional home loans can come with fixed or variable interest rate terms and have monthly payment amounts based on an interest rate and the length of the loan.



Common lengths of time for fixed rate loans are for 15 or 30 years. There are also 40, 25, 20, and 10 year loans. Generally, the longer the loan term, the lower the monthly payments will be. Most of the time, conventional home loans require a substantial initial down payment to qualify. As with all types of loans, it is best to check with your lender or terms of your offer. Some lenders may reduce the amount of down payment that is required, or even may determine that no down payment is necessary at all.



When choosing the type of mortgage for buying a home or property make sure you shop around the different mortgage brokers and what kind of financial services that they can provide for you.



ARM or Adjustable Rate Mortgages are similar to conventional mortgages but have an adjustment period. The adjustment period is generally 3 to 5 years in which you are given a fixed low interest rate. After this specified period of time, your interest rate will begin to vary based on the rate of a predetermined index, plus an additional agreed upon margin.



Many times, the interest rate is recalculated for this type of loan every 6 months or every year. Because interest rates may increase from one period to the next based on the rising or falling of the index, this is considered a more risky type of loan for those seeking to stay in a home over a longer period of time.



For those who qualify, there are also some special loan types to consider. There are FHA loans, which are loans designed for people with lower. And for first time home buyers, there is a first time buyer mortgage.



Because the purchase of an initial first home can be confusing for the first time home buyer, many lenders offer these types of loans with simple terms and requirements. They are generally, fixed rate conventional mortgages with little or no down payment required and low interest rates. A first time buyer mortgage is considered one of the most favorable types of mortgage to obtain.

What is a Mortgage?

A mortgage is a loan, usually from a bank, finance company or building society to help you buy your home.

A mortgage is a loan, from a bank or building society that is secured against your house or flat. You have to pay back everything you borrow from your lender within an agreed length of time (the mortgage term). You also have to pay interest on what you have borrowed.

A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies.



To repay the mortgage you either make monthly repayments of interest and capital, or you pay interest only each month then repay the loan at the end of the mortgage term from separate savings or investments.

The purpose of a mortgage is, quite simply, to enable a person to borrow money using the property as security. As the prices of houses are beyond the immediate personal resources of most purchasers, it is necessary to enter into a borrowing agreement with a lender.



A mortgage is therefore a form of a secured loan, whereby the lender agrees to lend a person the money to enable them to purchase a property. This loan is secured against the property by a legal charge and is subject to the purchaser and the property being able to meet the lender's criteria. This loan is then paid back over a period of time along with the interest charged by the lender.

In most cases lenders will offer three times a single person's salary or two-and-a-half times the borrowers' joint salaries.



However you should consider whether your budget can afford the repayments before borrowing to the hilt.

A mortgage is a long term financial commitment with repayments typically spread over a term of up to 25 years. However in practice, people often sell their house before the end of the mortgage period. The original loan is then repaid from the sale of the first house and a new loan is taken out to buy the new home.

Each joint borrower is individually liable for the amount of the loan and interest due to the lender and is always responsible for the full amount outstanding.



Events such as separation, divorce, unemployment, long term sickness, injury or disability could ultimately cause a house to be sold and the mortgage to be terminated. The early repayment of a loan can have different financial consequences depending on the type of mortgage involved.

Most mortgage lenders also require you to have a suitable life assurance policy, which would repay the borrowing in the event of death or critical illness. This ensures that, in these distressing circumstances, your house would not have to be sold to repay the mortgage.



You may find the perfect mortgage for you at your local building society. But shopping around could land you with a much better deal or alternatively you can use a mortgage broker. Mortgage brokers scour the market to find the most suitable deal for you. A good mortgage broker can save you time and money.

If you are in full-time employment the lender will ask for written evidence for example, payslips and your P60 for the past two years.



They'll also probably write to your employer asking for confirmation.

If you're self-employed it more difficult to get a mortgage and as a result there are lenders who specialise in the self-employed. You would need to show three years audited accounts. If you haven't been in business long enough then the lender should accept a letter of confirmation from your accountant.

You may freely reprint this article provided the author's biography remains intact:

Mortgage - Changes Ahead?

Borrowers should be acquainted of some of the changes demography abode in the mortgage industry afterwards two architecture societies afresh implemented rises in their SVR (standard capricious rate). As the endure Bank of England absorption amount has remained abiding for over 11 months, and abnormally as the endure move was downwards, this has angered and afraid their customers.



The two societies are N&P (Norwich and Peterborough) and the Nottingham. Borrowers with either of these societies whose mortgage is affiliated to the SVR will now face added account repayments.



N&P's SVR rose from 6.3% to 6.49% and Nottingham's went up from6.39% to 6.49%. Both societies were arresting apropos the move, as their borrowers are still benefiting from a (marginally) lower SVR than the archetypal 6.59%!



Many brokers were aloof by the move, with the Nottingham getting the a lot of criticised due to the actuality that in the aboriginal months of 2006 it was alms a 3 year abatement at 4.3%. This was arch the best buy tables for mortgages for a amount of weeks.



It is acquainted that there are humans who chose the three-year abatement plan in the endure ages or so and will alone just be commutual the deal. To accept this access alone on them, if absorption ante accept remained steady, is appalling. If they are bound in to the accommodation for 36 months, they are ashore with it.



In defence, a agent from the Nottingham Architecture Association claimed that, to an boilerplate borrower, the acceleration in transaction would be beneath than ฃ2 per week.



They accept accounting to applicants and accepted borrowers allegorical them of the bearings and accept that they abide to action associates abundant value.



The majority of N&P's capricious deals will not be afflicted as they are trackers, affiliated to abject rate.



If you are allotment way through a discounted appellation with either society, there is not a lot you can do to save the situation, as aboriginal accretion accuse will administer if you about-face lenders. Obviously if you are advancing the end of a abatement aeon you should re-mortgage.



The once-popular cashback deals are not apparent as such a abundant accord any more. They usually tie the borrower into paying a college absorption amount and they may administer the abundant college accepted amount for up to 18 months if they don't wish to accord the cash. These mortgages frequently backpack beyond fees too.



One of the banks who action "help with costs" on a lot of of its deals is the Northern Rock. They accept afresh afflicted the agreement of their offer. The antecedent ฃ1000 action (repayable if they defected to an addition accord aural 42 months) has been bargain to ฃ750.



However, this is an bigger accord for borrowers who remortgage to Northern Rock from addition lender. The banknote is now alone repayable if the accommodation is adored to alteration to a new Northern Rock accord aural 24 months.



The 42 ages claim aeon will still administer to acquirement and mortgage-review clients, if they about-face deals. This agency that if you accept a ฃ150,000 two year anchored amount 4.79% accord you would pay an added ฃ4,050 in mortgage repayments should you adjudge to pay their 6.



59% accepted capricious amount for 18 months, in alternative to repaying the ฃ750 cashback. As one agent said "Northern Rock is backbreaking loyal barter with this move. If you are an absolute chump remortgaging with them and you yield the admonition with costs option, you will be angry in for three-and-a-half years, yet new remortgage barter switching from addition lender are alone angry in for two."



The amount of remortgaging to addition of the bank's accord exceeds the ฃ750 cashback and so doesn't even awning the costs of blockage with them.



The burden on mortgage borrowers is a aftereffect of growing antagonism aural the business cyberbanking sector. Our admonition is to yield affliction to accept the appropriate accord and consistently amend the bearings to ensure you're not getting "ripped-off".

Go on-line and acquisition a mortgage agent who'll apperceive absolutely what's traveling on in the mortgage bazaar and who can analyze all the deals on action and acquisition the appropriate one for you.



Before it's too late!



The advice in this commodity is actual as at 18th July 2006