Equus Mortgage Service
This guide is supplied for general information only. You should
seek specific advice for your individual circumstances before acting on any of
the information outlined below.
The mortgage marketplace is extremely competitive as there are a myriad of
mortgage research tools available on the Internet today and a significant number
of mortgage lenders, who spend millions a year advertising their latest mortgage
offering. Armed with these tools, it is feasible that you could source a
reasonably good mortgage product in less than an hour.
There are also a large number of mortgage brokers in the market place, some
National Brokerages have huge marketing budgets whilst other smaller brokers
operate on a more low key basis.
However, we believe the biggest question potential clients will ask
themselves is this. “Why should I use a broker, when I have all the information
available at my fingertips? Furthermore, given the information that is available
and the fact that brokers may charge a fee for their services, what additional
value will I receive to make the service worthwhile?” We offer full
management of the mortgage process in an efficient manner. We have transacted
thousands of mortgages since our inception in 1998 and during this time we have
come to know our market extremely well. Please contact one of our mortgage
Advisers for assistance.
Different types of mortgages
Although there are many different types of mortgages on the market, generally
they can be split into basic types:
Repayment mortgage:
Under these arrangements you are
required to make monthly payments which are made up of part capital and part
interest. The structure of the repayment method normally means that during the
early years of the mortgage, little capital is repaid. The rate of repayment
accelerates over time. Repayment mortgages are normally quite flexible as it is
sometimes possible to extend the term of the loan but only with the written
permission of the lender. Also, it is normally possible to increase the capital
repayment of the loan so decreasing the term, allowing you to repay your debt
early.
Interest only:
These arrangements do not require that you
make capital repayments until the end of the loan. The monthly payments to the
lender are made up entirely of interest on your outstanding debt. In order to
pay off the loan at the end of the loan term, you must have an amount equal to
the outstanding debt. Most people achieve this by making regular contributions
to a savings plan; this plan is targeted to accumulate an amount sufficient to
repay the outstanding debt at the end of the mortgage term. Any such savings
plan (e.g. Endowment or ISA plan) should be kept under regular review. It is
important that you are aware that the value of units in unit-linked investments,
as well as any income which they generate, can fall as well as rise and that
past performance should not be treated as a guide to future returns.
Flexible:
These offer you the option to increase or
decrease your monthly payments (and sometimes even the opportunity to stop them
altogether for specified periods. This flexibility is designed to assist you to
manage your cash flow. Many flexible mortgages offer daily or monthly
calculation of interest.
Offset:
The latest addition to the mortgage range
is a combined system of current, savings and mortgage accounts. The mortgage
element will still be a repayment, interest only or flexible loan but the amount
of money in your current and/or savings accounts is taken into account when the
lender calculates the interest due on your mortgage. For example, if you hold a
savings account with a balance of £1,000, this amount will be considered by the
lender when calculating the interest due by effectively reducing the total
mortgage by an amount equal to your savings.
Drawdown
You may also find a ‘drawdown’ mortgage, which
is helpful if you have a property that requires renovation. You receive a basic
amount, but as you complete renovation work on your home, further amounts become
available for you to draw down as and when required.
Further differences occur in the way interest is calculated on your
mortgage.
Variable:
The interest rate you pay rises and falls in
line with the Bank of England base rate.
Fixed:
The interest rate is fixed for a given
time at the start of your mortgage normally from 1 to 5 years although this can
be longer. Note that you may have to pay a higher interest rate when the fixed
period finishes.
Discounted:
The lender gives you a discount on its
standard variable rate for a given time.
Capped:
The interest rate is guaranteed not to rise
above a certain percentage, but it may also have a ‘collar’, i.e. it will not
fall below a certain rate. However, there is normally a fixed timescale for the
capped rate period.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A
MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
For further information, please contact Equus IFM
Ltd