Mortgages

What is a mortgage?

You borrow money against a property asset, pay interest on the loan and pay it back over a period of agreed time.

What impacts on the mortgage?

• The different interest rate basis
• The different ways to repay it
• The term you are borrowing for
• The special conditions or circumstances, if any
• And currency if international

Examples of common types of mortgage terminology

• repayment (good planning)
• interest-only (don’t give yourself a scare at the end)
• fixed rate (early stage security)
• variable rate (status quo)
• right-to-buy (ooh, it’s a sale time)
• buy-to-let (masters of the universe)
• tracker (we do like to gamble)
• discounted rate (nothings for free)
• capped rate (what goes up normally also goes down)
• cap and collar (noooo, its not to do with S&M)
• cashback (they’re not giving it away..)
• offset (no, you don’t give your husband or wife away at the end)
• flexible (sorry girls, it’s not another Yoga course)
• first time buyer (enjoy!)

The two core ways of paying back the loan are repayment and interest only

Repayment mortgages use a combination of capital and interest over the term, At the end of which the loan is fully repaid. Benefit, its paid off in full at the end due to the higher repayment schedule paying of the capital.

Interest only mortgages use a payment of the interest only due and the full balance of the loan outstanding at the end of term needing to be repaid in full by you. Benefit, it’s a lower monthly cost but you still owe the money at the end –so beware.

For long term planning and general lifestyle, owning your own property is great. Buying a few more if possible, has normally turned out very well for people over a longer period. At times of hype massive gains have been made over short periods. Some have also lost money and their homes at times like this.

Property as part of your lifestyle, overall asset portfolio (and retirement planning) is considered a good thing. Sounds like a win, win to me. Happy hunting!