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MORTGAGE LOAN

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CONTENTS

I. Mortgage loan basicsII. Mortgage loan typesIII. Mortgage in the U.KIV. Mortgage insuranceV. Business mortgage loan

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WHAT IS MORTGAGE?

A loan to finance the purchase of real estate, usually with specified payment periods and interest rates.

The borrower gives the lender a lien on the property as collateral for the loan.

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MORTGAGE LOAN TYPE Interest Interest may be fixed for the life

of the loan or variable, and change at certain pre-defined periods the interest rate can be higher or lower.

Term Mortgage loans generally have a

maximum term that is the number of years after which an amortizing loan will be repaid.

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MORTGAGE LOAN TYPE Payment amount and

frequency The amount paid per period and the

frequency of payments. Prepayment some types of mortgages may limit or restrict prepayment of all or a portion of the loan or require

payment of a penalty to the lender for prepayment.

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MORTGAGE IN THE U.K

The mortgage loans industry and market There are currently over 200 significant separate

financial organizations supplying mortgage loans to house buyers in Britain.

The major lenders include 1. Building societies 2. Banks3. Specialized mortgage corporations 4. Insurance companies Pension funds

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MORTGAGE IN THE U.KSelf Certification Mortgage Self Certification Mortgages Known as "self cert"

mortgages Be able to employed and self employed people who

have a deposit to buy a house but lack the sufficient documentation to prove their income.

Have two disadvantages 1. The interest rates charged are usually higher than for

normal mortgages 2. The loan to value ratio is usually lower

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MORTGAGE IN THE U.K

100% Mortgage Normally when a bank lends customer money they want

to protect their money However,100% mortgages are mortgages that require no

deposit.

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MORTGAGE IN THE U.K A fixed rate: The interest rate remains constant for a set

period,typically for 2, 3, 4, 5 or 10 years. -Short term – less than 5 years. -Longer term – more than 5 years.

A capped rate: 1. Similar to a fixed rate 2. The interest rate cannot rise above the cap but can vary beneath

the cap. 3. Sometimes there is a collar associated with this type of rate

which imposes a minimum rate. 4. Capped rate are often offered over periods similar to fixed rates.

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MORTGAGE IN THE U.K A discount rate: There is set margin reduction in the standard variable

rate for a set period, typically 1 to 5 years. Sometimes the discount is expressed as a margin over the base rate and sometimes the rate is stepped.

A cash-back mortgage: A lump sum is provided as a percentage of the advance.

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MORTGAGE INSURANCES

Mortgage insurance is an insurance policy designed to protect the mortgagee lender from any default by the mortgage borrower.

It is used commonly in loans with a loan-to-value ratio over 80%, and employed in the event of foreclosure and repossession.

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Business Mortgage Loan Business loan mortgage is in the process of securing a business loan. The other name is commercial mortgage loan.

Terms of business mortgage loan -The term of a business mortgage loan : from 5 years to 30 years. -business organizations choose to repay the loan: 20years to 30 years.

Use of business loan mortgage Business loan mortgages are generally used to acquire land or any

commercial property to start a business.

These loans are also taken to expand an existing business. Another use is to refinance a credit taken earlier.

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