Christian Debt Recovery

Debt Buying 101

February 9th, 2011 |

Author: Gavin

debt buying 101

Mortgage 101 – Your Guide to Mortgages

Are you fed up with paying the rent every month? Do you feel it’s time to settle down and have a place to call home? Well then it sounds like it’s time to shop around for properties. Don’t worry, you don’t have to be a millionaire to buy a house for yourself and your family with hard cash – you can apply for a mortgage, a bank loan to cover your purchase.

In really simple terms, mortgage is one big loan bank issues to pay for your new property. You repay the loan over a specified amount of time which usually is 10 to 25 years depending on your personal circumstances such as age and income. Since the lender needs to profit from it as well, there’s a mortgage interest applied to your loan and calculated on an annual basis – the longer it takes you to repay the mortgage in full the more it will cost you in total.

Most people qualify for a mortgage but the amount of money available for them differs significantly. There are three major factors which determine your suitability and these are your credit rating, income and age.

Credit rating

It’s a background check lenders run during every mortgage application process. It calculates your financial commitments such as credit card debts and other monthly repayments to determine whether or not your financial position is stable enough to cope with another monthly payment.

Your income

While it sounds obvious, there is a limit to what you are able to repay every month. The higher your income is, the more expensive property bank will be willing to pay for. Usually lenders offer anything worth between 3 and 5 times your annual wages. This amount doubles if you apply for a joint mortgage with a spouse.

Your age

From the bank’s point of view, there isn’t much point in spreading mortgage repayments over 30 years for a 60 years old person. There is a market segment aimed specifically at the senior customers but in general the longest repayment periods are offered to people between 20 and 40 years of age.

What’s the catch?

Mortgage loan may give you the opportunity to purchase a property without paying for it in full straight away, but there are a few things you should take into consideration before making the commitment.

First of all, if you fail to make the monthly repayments your home will be repossessed. The truth is that even though you start calling it ‘yours’ from the moment you move in, on day one your home equity is equal to zero. Monthly payments slowly increase this value but until it’s paid in full, the property has two owners – yourself and the bank.

Secondly, where in certain cases the monthly repayments will be lower than rent you may have been paying so far, being a homeowner may actually cost you more than being a tenant. Remember the boiler repairs and fitting new windows? Yes, from now on it will be your responsibility to cover each and every expense which may arise from using your property.

As long you remember about due diligence and shop around for the best deal, you will certainly become a proud homeowner really soon.

About the Author

Grist Lok is a financial consultant. He’s sharing thoughts and experience with mortgages on Mortgage in UK website as well as many others. There is a lot more to the mortgage loans so don’t hesitate and check out his mortgage guide to learn more.

2012 Family Guide to Groceries under $250 a Month

Melissa “Liss” Burnell has provided an extensive frugal living resource online for over a decade and presents a 2012 Grocery guide for struggling students and families of all sizes and income ranges. The average family of 4 in the United States spends more than $700 a month on groceries alone. In the “2012 Family Guide to Groceries under $250 a Month” the author outlines how and where to cut groc…

101 Ways to Stop Shopping and Start Saving

$5.99

Are you a compulsive shopper? Do you run to the store to pick up something but come home with bags of stuff? Are you accumulating clutter because you can’t stop shopping? 101 Ways to Stop Shopping and Start Saving will make you think twice before you decide to walk into the next store. Get 101 ideas including how to:• Resist the temptation to shop and spend money• Put “retail therapy” in…