The Glossary
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The
Letter F
This
section provides information on terms and phrases beginning with
the letter F
At the grabber we know finance is full of
confusing terms and phrases, and so on this page we explain:
First Time Buyer |
Fixed Rate Mortgage |
Flexible Mortgages |
Freehold
A person or couple after their first home and so their first
mortgage are called first time buyers. A first time buyer has no
pre-existing equity in property so the size of the mortgage
available could be restricted. There are first time mortgage
packages available that are aimed at buyers new to the
complexities of the property market, which include enhanced help
and assistance with the legal side of property buying.
For first time buyers the first step towards purchasing a home
is to find out how much can be borrowed for a mortgage.
This is worked out according to income multiples, the income
multiple is the calculation used by lenders when allotting a
mortgage amount. The lenders all have different combinations to
work out how much can be borrowed, as a rough rule the maximum
amount normally available to a individual will be 3.25 times
their annual salary. Alternatively, it tends to be 2.5 times the
joint income if buying property with a spouse or partner. With
the majority of brokers offering mortgages up to 95% of a
properties value, the first time buyer will need a deposit of at
least 5% of the price.
The second step is to find a sound property to purchase, whether
the buyer decides to use an estate agent or proceed alone the
property will need to be in their price range.
The third step is to formally make an offer to the seller for
their property and this is done using solicitors acting for both
parties.
The fourth step involves the exchange of contracts for the
property with the buyer then becoming the home owner.
First time buyers should be aware that it is beneficial to have
the largest down payment you can manage to save toward the
properties value. This down payment or deposit does not cost you
interest. Most lenders prefer to lend you a percentage of the
value of a property rather than 100%, that way should you not
keep up repayments they can take procession of the property and
sell it for a profit. A lender is legally within their rights to
repossess your home if you continuously fail to make monthly
payments.
If you are a UK resident and after a mortgage the Grabber has a
mortgage section on it.
A fixed rate mortgage is a mortgage which has a set interest
rate for a pre-determined term. With the fixed rate mortgage the
interest rate is set for the entire period of the term, the
advantage of this is that it enables the mortgage holder to know
the exact amount they will be paying during this set duration.
The disadvantage of the fixed rate mortgage is that if interest
rates fall the customer will still be paying repayments at the
pre-agreed rate.
Their are many reasons for taking on a fixed rate mortgage, one
possible reason is for budgeting. If a borrower has strict
financial constraints upon them, knowing precisely the mortgage
premium amount required will allow them to budget accurately and
accordingly.
If you are after more mortgage information the Grabber has a
mortgage section on it, as well as an application form
should you wish to apply for a mortgage.
A flexible mortgage is a mortgage that allows the flexibility of
repayments and the repayment amounts. Normally, a borrower with
a flexible rate mortgage will be allowed to overpay, underpay or
take payment holidays. It might be possible to offset savings
against the mortgage to help with the flexible rate mortgage
premium repayments.
Certain flexible mortgages will even offer daily interest rates
so any overpayments made will show benefit straight away. Some
if not most flexible rate mortgages will require that an
overpayment is made before an underpayment or a payment holiday
would be acceptable.
The advantage of the flexible mortgage is that if you encounter
some unforeseen financial problem, you could pay less or even
temporarily cease mortgage payments while you deal with the
emergency. And then you would be free to catch up with your
repayments.
Freehold is the legal term used for the owner of property and
its land. Being the freeholder means you are the absolute owner
of the property and the land it's on and have the deeds to the
property.
When a mortgage loan has been paid off and no debt is left
outstanding on it they would then be given the deeds and thus
the freehold to their property.
Got a piece of jargon you want explaining, it's time to let The Grabber loose.
Associated Pages
flexible
remortgage |
first mortgage
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