Important things to know about mortgage

Thinking about taking out a mortgage loan to buy a new house? Then, read this article first to fully understand what you’re getting into.

14:44 27 June 2013

Mortgage is a type of loan to help borrowers buy a property. This is a secured type of loan. It means that should you fail to make repayments, the lender has the right to repossess the property.

There are different types of mortgage available in the market today. You can choose based on preference. There’s fixed rate mortgage where you’ll pay the same amount per month for the rest of the loan term. There’s also variable rate mortgage where the rate can change depending on economic factors. This means that the interest rate that you’re going to pay may go up or down.

Aside from interest rates, you also need to consider set up fees. This can vary from a few hundred pounds up to a couple of thousands. Fees that you can expect to pay are product reservation fee, which is non-refundable, and the arrangement fee. Keep in mind that different lenders charge different amount for these fees.

Most mortgage loan are payable within 25-30 years. However, you have the option to make advance payments to shorten the term and to lower the interest rate.