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Mortgage Advice

Mortgage Advice

Most residents of Maidenhead, Windsor and Slough have to borrow money to buy a property and this loan is a mortgage. Homeowners usually take this out over a fixed period and are required to pay interest on top of their monthly repayments of the loan. It is vital that all mortgage applicants understand the strict terms set out by lenders, which are usually laid out in small print and stipulate that if you cannot keep up with repayments you will be at risk of losing your home.

Type of Mortgage
Repayment mortgage - Homeowners must repay the capital in monthly instalments over the period of the mortgage taken out and interest is added to this loan. The amount of interest goes down over the years as the capital is paid off.
Interest-only mortgage - Only the interest which accrues is paid to the lender every month, but none of the actual loan. However, the householder is still responsible for paying the loan off in full at the end of the mortgage period.
Endowment mortgage - This mortgage types carries more risk. The homeowner will take a loan from the lender along with an endowment policy with an insurance company. Instead of paying an instalment of the loan, householders pay the interest to the lender, but pay a monthly amount to the insurance company for the endowment policy. As the mortgage comes to an end, the policy should have matured and a lump sum will be paid to the lender to pay off the mortgage and money could be left over. The downside could be that the policy does not produce enough money at the end of the mortgage period to pay off the whole loan.
Pension mortgage - This type is often used by self-employed people. Only interest is paid on the loan every month but a sum is also paid into a pension scheme, so that when a borrower retires, there should be enough money to repay the mortgage in full and to have a sum for a pension.
ISA mortgage - Again, interest only is paid to the lender, while the monthly instalment is paid into an Individual Savings Account (ISA), which should pay of the loan.
Usually people in Maidenhead, Windsor and Slough would be able to only get mortgage loans from banks or building societies, however now a huge amount of other organisations lend. Insurance companies, finance houses and specialised mortgage companies give them out, as well as house builders who offer loans on new-build homes. Instead of going directly to the lenders, some borrowers go via a broker to find them the best deals and mortgage advice. The broker will take a fee to find the best mortgage to suit householders' needs, and a free guide for using a broker can be sought from the Financial Services Authority, which offers mortgage advice in the UK


Mortgage rates
There are different kinds of interest rates which can be paid on mortgages:
Variable - This coincides with the set interest rates and means borrowers pay what it is at any given time.
Fixed - Borrowers can fix an agreed rate for a certain period (usually two to five years) and this is ideal for those who need to budget monthly outgoings or who think the interest rates may increase. There is no benefit if the interest rates fall, however. There are penalties for those who try and end their fixed rate before the allotted time is over, which would be calculated according to how much time is left on the period.
Capped - This is the same as a fixed rate but the borrower can pay less if the rate falls.
Cash back deals - Lenders can offer money back 'deals' if you take out a particular product.
Discounted - This is when a lender offers a discount of their variable rate and the rate paid will alter along with the changes in the variable rates over a set period.
For general advice, please visit the Financial Services Authority website.

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