Home Loans GB
Welcome to Home Loans GB, we are an online guide that will help
you understand about the different types of home loans available
to you the consumer.
Buying a home is one of the biggest decisions that we will make
in our lifetime, it is probably on par with getting married. They
say an English mans home is his castle, it is certainly a place
where you spend a lot of time, the home is where you come back
to after a hard days work, your place to relax and unwind.
What is a UK home loan?
A home loan is in effect a mortgage/ personal loan that is taken
out with a building society or bank and used to pay for a home
or property. The lender is then paid back their lump sum in monthly
instalments over a fixed period of time. Like personal loans,
home loan/ mortgages are subject to interest charges.
Home Loan Types
There are essentially two kinds of home loan/mortgages, repayment
only and interest only.
The repayment only method consists of capital repayments and
interest charges, much the same as the payment process for paying
back a normal personal loan. The advantages of this type of home
loan are that you can pay off lump sums, thus reducing the interest
and capital amounts repayable. Another benefit of this type of
home loan is that, come the end of the repayment term the borrower
is secure in the knowledge that the home loan has been totally
repaid. There are drawbacks in this type of home loan/ mortgage,
due to the fact that the bulk of the loan payments made early
in the repayment term consist mainly of interest payments. A borrower
that moves home frequently might find this type of home loan a
disadvantage as little of the actual home loan/ mortgage gets
repaid.
Interest only home loans consist of monthly repayments that
consist only of interest payments. The capital repayments are
paid into an alternative vehicle such as an endowment policy,
ISA or pension scheme, it is this repayment vehicle that repays
the lender with the capital at the end of the home loan term.
Each type of repayment method has its bonuses, though it is important
to choose what is right for you.
Interest Rates
When taking out a home loan/ mortgage you will need to give
careful consideration to the interest rate. There are four types:
fixed rate, variable rate, capped rate and discount rate.
. With fixed rate home loans the interest rate remains at a
fixed constant level for a certain length of time, regardless
of market fluctuations. At the end of the fixed rate term, the
interest rate returns to the lenders standard variable rate (SVR).
. Variable home loans consist of interest rates that will constantly
vary according with market conditions.
. A capped rate home loan is when a lender caps the repayable
interest rate at a maximum level; if the SVR drops below the capped
rate, the interest payable is based on the lower variable rate
whereas if the SVR rises above the capped rate, the interest payable
is based on the capped rate, and not the higher SVR.
. A discount rate home loan features a variable interest rate,
but with a fixed discount for a certain period of time e.g. a
variable rate of 5% with a discount of 2% means that the interest
payable is 3%. The discount value of 2% remains constant regardless
of the variable rate.
If you're looking for anything other than a home loan in the
way of loan products we recommend you go to Loans
UK for a wide aray of loans at competitive rates.
Mortgage UK - An online
UK mortgage resource and free no obligaton advice service for
anyone borrowing in the UK.
We are now happy to anounce that our site is now
listed on the Finance Directory,
the top internet directory for finance related site.
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