Thursday, September 13, 2007

Population Friendly View of Mortgage Process in UK

The mortgage process in UK normally comprises of six basic steps and in general takes from 4-6 weeks, and includes 6 major milestones. If you want to taste sweet successful mortgage process in UK then make sure to understand below mentioned steps:

Apply For Your Loan

Process starts by application for mortgage loan as per needs to potential lender. Explore this part of mortgage process well as future of the whole process depends on this step only.

Submit the Application for Review

A Loan Consultant of lender will review your application and request a credit report for all applicants and submit your information to underwriting department for an initial lending decision.

Receive the Welcome Package

Once you are approved and registered, your title report, appraisal, and flood certification will be ordered and you will receive a welcome information package introducing you to your loan counselor, who will be your guide through remainder of the loan process. You will also receive other important documents to review.

Reports are Review Phase

Your Loan Processor will review the title report, appraisal, and flood certification and verify that all conditions of the initial lending decision have been met prior to obtaining the final lending decision.

After the Final Lending Decision

Your Loan Processor will notify you of the final lending decision and will schedule a date and time for your loan closing.

The Loan is Closed and Funded

Attend the loan closing where you will review and sign the loan documents.

Different Types of Mortgages Available in UK

There are two main types of mortgage, namely repayment mortgages and interest only mortgages. There are several different ways of repaying interest only mortgages, and so interest only mortgages have several different options available including different investment options to pay off the mortgage, and also different types of interest rate. The savings made can differ substantially between the different types of mortgages and between the different lenders.

Repayment Mortgage

The payments you make to the lender every month pay off both the capital and the interest from the mortgage. Provided you keep up the payments, you are guaranteed to pay off the loan by the end of the term agreed (usually between 20 and 30 years). You usually pay off more interest at the start of the mortgage term and then gradually more of the capital debt. Therefore, in later years, you will be repaying increasing amounts of capital and reducing amounts of interest. It may seem as if this is costing more but that's because unlike the other types of mortgages you're paying off the capital and not just the interest.

First time buyers will usually get a low start capital repayment mortgage where for the early years of the mortgage interest only is repayed. Most lenders also offer Flexible mortgages and 100% mortgages.

Interest-Only Mortgages

An interest-only mortgage is where the lender only charges you interest on the loan you've agreed. You don't pay the capital back until the end of the mortgage term 25 years or whatever period agreed. The idea of this mortgage is that you pay the interest owed to the lender and save the capital repayments by investing them elswhere. At the end of the mortgage term you will have hopefully made enough money from investments to pay the lump capital sum. This way you can possibly make a saving by investing capital that would otherwise be paid straight back to the mortgage lender. The lender may offer you an investment opportunity if you choose an interest only mortgage such as an ISA. There are several different types of interest-only mortgage:

■ Endowment mortgages
■ Unit linked Endowment mortgages
■ ISA mortgages
■ Pension linked mortgages

There are also several different types of interest rates:

■ Fixed Rate
■ Standard Variable Rate
■ Capped Rate
■ Discounted rate
■ Base Rate Tracker

Information compiled in above lines in relation to Mortgage process in UK will definitely simplify the process for individuals looking for quick mortgage approval.


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