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Category: MORTGAGE TYPE
MORTGAGE TYPE
Mortgage Glossary
Annual Percentage Rate of Charge (APRC) Mortgage lenders must quote an Annual Percentage Rate (APRC) as well as their standard interest rate. The APRC can be slightly confusing for borrowers, but it factors in the total cost of credit to you as a consumer and is then expressed as an annual percentage of the total… Read more
Choosing a 2, 5 or 10 year fixed mortgage
Choosing between 2-year, 5-year, and 10-year fixed-rate mortgages depends on individual financial circumstances, risk tolerance, and future plans. Here’s a breakdown of who each type of mortgage might suit: 1. 2-Year Fixed-Rate Mortgage: 2. 5-Year Fixed-Rate Mortgage: 3. 10-Year Fixed-Rate Mortgage: Summary: Choosing the right fixed-rate mortgage depends on balancing personal circumstances, financial goals, and… Read more
What is securitisation?
Securitisation in mortgages is a financial process that involves pooling various types of mortgage loans and then selling these consolidated debt as mortgage-backed securities (MBS) to investors. This process helps lenders to free up capital, allowing them to issue more loans, and provides investors with an opportunity to invest in real estate without having to… Read more
Drawbacks of an equity share mortgage
An equity share mortgage, also known as a shared equity mortgage, is a type of home loan where the borrower and the lender (or another party) share ownership of the property. While this type of mortgage can make homeownership more accessible, especially for first-time buyers, it also comes with certain drawbacks. Here are some of… Read more
Sharia mortgages: the Murabaha method
The Murabaha method is a common structure used in Sharia-compliant mortgages, which adhere to Islamic law (Sharia). Sharia prohibits the payment or receipt of interest (riba), so conventional mortgages are not permissible. Instead, Islamic financing uses structures like Murabaha to facilitate home ownership while complying with religious principles. Here’s how the Murabaha method works in… Read more
Hybrid lifetime mortgages – what are the benefits?
Hybrid lifetime mortgages are a type of equity release product that combines features of both lifetime mortgages and interest-only mortgages. They allow homeowners, typically aged 55 and over, to borrow against the value of their home while retaining ownership and having the option to make voluntary interest payments. Here are the benefits of hybrid lifetime… Read more
The differences between fixed and capped rate mortgages
Fixed-rate and capped-rate mortgages are two types of mortgage products that offer different ways to manage the interest rate on a home loan. Here are the main differences between the two: Fixed-Rate Mortgages A fixed-rate mortgage has an interest rate that remains the same for a specified period, typically between 2 to 10 years. Here… Read more
Interest only mortgages – what happens if the debt is not cleared at the end of the term?
Interest-only mortgages allow borrowers to pay only the interest on the loan for a set period, usually between 5 to 10 years, while the principal amount remains unchanged. At the end of the interest-only period, the borrower typically must either start paying both principal and interest or pay off the entire remaining loan balance. Here’s… Read more
What is a flexible mortgage?
A flexible mortgage in the UK is a type of home loan that provides the borrower with various flexible features not typically available in standard mortgages. These features can offer greater control over how the mortgage is managed and repaid. Some of the key characteristics of a flexible mortgage include: These features provide significant advantages… Read more
What is a limited liability guarantee mortgage?
A “limited liability guarantee mortgage” is not a standard term in the mortgage industry. However, based on the context and common mortgage terminology, it might refer to a specific type of mortgage arrangement or structure that involves limited liability and guarantees. Here’s a breakdown of what this term could potentially entail: Limited Liability Company (LLC)… Read more