Mortgages-All You Need To Know

If you are interested in renting property or you want to increase the number of places you rent you should look into buy-to-let mortgages. These mortgages are created for people who are in property renting business. But it will be hard to get this kind of mortgage if you are not in this kind of business. Your credit record must be excellent and you must be free of other loans.

And you have to be young in order to take this kind of mortgage (this is the case with other types of mortgage as well).

Interest rate on the buy-and-let mortgage is higher than other types of mortgage and you will have to deposit between 20 and 40 percent of the mortgage amount. Fees for this mortgage are also higher than they are on other mortgages. Rental income you receive must be at least 25 to 30 percent higher than the mortgage installment (in case of mortgage installments you pay only interest on monthly basis, but at the end of repayment period you will have to repay whole mortgage loan).

Partnership mortgage is another type of mortgages which involves interest-free loans. It works like this: you take a mortgage which is significantly smaller than normal mortgage, this mortgage requires high deposit but it is interest free and at the end you have to repay that mortgage loan (which is logical), but you will have to pay up the difference between value of your home between the point you have took the mortgage and the point of your final installment.

Key features of partnership mortgages are:
– It requires a minimum 20 percent deposit meaning that you have to posses at least 80 percent of equity if you are remortgaging.
– There are two lenders that are involved in this mortgage and two loans you take. First loan is 60 percent of the total amount taken as normal mortgage and second one is 20 percent of interest-free loan.

– 20 percent of this type of mortgage is repaid in full once you reach the agreed term or once you sell or remortgage property in question.

Second Mortgage

Second mortgage means that you can have two mortgages at the same time. To be able to apply and get second mortgage you must own property which will be used as security for second mortgage. The property in question doesn’t have to be the place you live in. The equity that will be used as security for your second mortgage is calculated by taking the value of that property and deducting the mortgage that is still left on that property.

You might think that it is stupid to take another mortgage, but there are situations in which that become viable option:
– If your credit score got bad remortgaging will cost you more than taking new mortgage (interest rate will be better)
– High early repayment charge on your mortgage makes it cheaper for you to take new mortgage than to remortgage that one
– If you can’t get hold on a personal loan due to self-employment status you can get that money through second mortgage.