MORTGAGE EXPLANATIONS

Here we briefly try to help explain some mortgage terminology and issues.

It is important that you understand how lenders calculate interest rates since this can impact on your total payments. Interest is the method of paying the mortgage lender for the borrowed sum.

The amount that you borrow is the "capital".
The "interest" is the cost of borrowing the capital.

There are standard mortgage types and then the specialist mortgage types which can be used if your mortgage needs do not fit a standard criteria.

Non-standard mortgages cover a wide range of purposes, from;

1. Adverse credit mortgages for people with poor credit histories
   
   
2. Mortgages for people who are self-employed and can provide normally three years audited accounts.
   
   
3. Self-certification mortgages where the accountant generally certifies the level of income.
   
   
4. Let-to-buy for those letting their current property with a view to buying a new home as well.
   
   
5. Buy-to-let type of mortgage, where people take out a mortgage used purely to buy a property to rent out.
   

Newer mortgage types have appeared to cater for the changing needs of mortgage borrowers.

1. Offset mortgages reduces the amount you owe on a loan or mortgage by the amount of money in your savings accounts.

1. A current account mortgage converts your current account into an "overdraft", with your incomings and outgoings using this account.

1. A stepped rate mortgage slowly reduces a discount on a mortgage.

1. Flexible mortgages allow you to overpay, underpay and take payment holidays.

1. Tracker mortgages see the interest rate follow the Bank of England base rate up and down.
   

Protection Policies
Mortgage protection insurance is taken out with a view to protect your income when you take out a loan, against accidents, illnesses and redundancy. Should you lose your income, you may not be able to keep up payments on your home and may even lose it.