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This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
A mortgage is borrowing money using property as a security, a
type of secured loan in other words. Primarily, the purpose in
borrowing the money is to purchase a property.
A mortgage is really another word for a property loan - a loan
that allows you to borrow a large amount of money in order to
buy a home or property which is secured on the value of that
property, and which you pay back over an agreed period of time.
The term 'secured' means that if you default on payments and
can't keep up with the payments schedule as agreed, the lender
has the right to sell your property in order to recover their
money.
A mortgage can be broken down into four main parts:
Capital – This is the amount of money that you borrow to buy the
house.
Interest – This is the charge for borrowing money. Worked out as
a percentage of the capital. Term – This is the fixed period of
time that the money is borrowed over.
Repayments – These are the regular payments you make throughout
the term of the mortgage. The mortgage is created by a legal
charge on the property and, significantly, does not involve the
transfer of land. The charge confirms that the property has been
pledged to the lender as security for the mortgage loan.
Mortgages are usually repaid over 25 years, but depending on
your situation and earnings it can be arranged over either a
longer or shorter period of time. The amount you borrow is
called the 'capital', and you will also have to pay back the
interest charged to you by the lender.
The title deeds are held by the lender but when the purchase
monies are paid over to the vendor, usually through a solicitor,
the mortgagor becomes the owner of the property. The legal
charge is supported by a loan agreement between the two parties
which sets out the terms of the loan, the responsibilities and
undertakings.
You have two options - repay the capital and the interest
together - this is a 'repayment' mortgage, or repay the interest
only, and organise another investment to cover the capital at
the end of the term. This is known as an 'interest only'
mortgage.
When looking at how much money a lender is willing to let you
borrow, there are two factors that they will want to consider.
First of all, they will want to know how much you earn. Usually
you will only be able to borrow around three times your salary.
If you are looking to purchase a joint mortgage with a partner
or friend, then the income multiplier may be worked out
differently. Some lenders will offer two-and-a-half times the
joint salaries, or three times the higher salary, and one times
the lower salary, whichever is higher.
Most lenders will also take into account the amount that you are
looking to borrow, and the total value of the property. Although
some lenders will allow you to borrow the full value of the
property, most will only lend a certain percentage, say 95%.
When applying for a mortgage, there are certain points that you
will need to consider before you sign on the dotted line.
First of all you need to consider how much you can afford. You
should complete a budget, and work out how much money you have
coming in, and how much money you spend each month. This should
then give you an idea to how much you can afford to pay a lender
each month for your mortgage.
You should also consider whether your income would allow you to
afford the property you are after.
You also need to think about how long you will need to borrow
the money for. A mortgage is a major financial commitment and
will require that you can keep up the repayments for the full
term.
If you repay your mortgage before the end of the designated term
you may well be charged a penalty. Penalties are particularly
common in the first few years of a loan or if you are taking
advantage of a fixed rate or a discounted rate and can be very
significant in size. Sometimes it is possible to serve notice to
avoid these penalties.
Furthermore, some lenders will charge interest until the end of
the month in which redemption occurs so it may pay you to time
the redemption of your mortgage to avoid this charge. Some
lenders also make additional charges such as vacating fees, deed
release fees or other administration charges.
All of these costs should be highlighted in the mortgage offer
or in the standard Terms and Conditions provided with that
offer. Before committing to your mortgage, please check the
redemption penalties which will be mentioned in the mortgage
offer.
Getting a mortgage can be very complicated. If you are unsure
about which mortgage to go for, then you should seek some
financial advice.
You may freely reprint this article provided the author's
biography remains intact:
About the author:
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the www.directonlineloans.
co.uk website.