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Mortgage guide

The following post will give you some basic information about mortgage in Scotland. however if you want specific advice please make sure you speak to a proffesional finance advisor, broker or lender.

When buying a home, it is possible that you may not be able to pay for the house in cash. Like one of those tycoons, you hear about in Scotland. There are financial institutions that lend people money to buy homes. A mortgage refers to the loan meant for buying a residential property. A mortgage term refers to the duration of the time you acquire the loan up to the time when the borrower fulfills all the loan’s terms and pays the loan plus interest in full. Home buyers who have taken mortgages should adhere to the loan’s terms or risk repossession of their property.

What Types of Mortgages Exist in Scotland

There are several types of mortgages that exist. In Scotland, there are two common types of mortgages. They include repayment mortgages and interest-only mortgages.

Repayment mortgages: – The borrower gradually repays the loan money over the period of the loan through monthly installments. The monthly payments include both a portion of the capital and interest on the mortgage. As time progresses, the amount of money paid back to the lender increases while the quantity of interest goes down with time due to continued payment of monthly installments by the borrower.

Interest-only mortgages: – The monthly payments for this type of mortgage include interest only. Instead of repaying the loan capital on a monthly basis, payments for capital are deposited into a long-term investment plan or a savings account. The long-term investment plan’s goal is to yield enough money to pay the loan’s capital at the end of the mortgage term. If the investment falls short of the expected returns, the borrower must formulate a plan to make up for the shortage.

Other mortgage programs available in Scotland: – Islamic mortgage is a type of mortgage where the monthly installments do not include interest. Instead, the mortgage lender comes up with a different way of charging for lending you the capital you needed to buy your home. The charges take various forms depending on the borrower. For instance, the borrower might decide to charge you rent as the cost of lending you capital meant for purchasing your property.

Mortgage Affordability

It is reasonable to determine whether you can afford a mortgage before you start the process of borrowing. Lenders usually ensure that the borrower can afford the mortgage by checking the borrower’s proof of income. The lender also assesses what kind of liabilities the borrower has in his or her monthly cash flows. The lending entity may also try to examine the borrower’s habits to determine whether or not the borrower can afford a mortgage.

Borrowers must have the ability to cater for initial loan repayments and other initial costs such as legal fees, stamp duty charges, and others in that category.

Lenders always want to know whether the borrower is flexible in that he or she can withstand financial adjustments in the future. The borrower must be able to cope financially in the event where interest rates go up in the future. Changes might occur which affect the borrower’s income such as new commitments like starting a family or even retirement.

Places to Acquire a Mortgage Loan from

There are various sources of Mortgages in Scotland. Some of these sources include banks, building societies, and other financial institutions such as specialized mortgage companies.

In Scotland, there are government-aided schemes aimed at facilitating access to housing for members of the public.

Acquiring a Mortgage through a Broker

You may not be able to get a mortgage maybe because the property you seek to obtain is unique, or there is the need for a large amount of loan, or you are one of those self-employed professionals whose income fluctuates from time to time, or where two partners want to make a joint purchase. You may require the intervention of an estate agent, and insurance or a mortgage broker.