| The decision to mortgage house does not in any way | | | | the unpaid mortgage balance. Normally 25% of the |
| show that you are not emotionally attached to your | | | | pension is available tax-free to every borrower. |
| house. On the other hand, it was your concern for the | | | | Pension is the result of contribution of the employer |
| house that restrained you from selling it. As compared | | | | and the employees over the work life of the borrower. |
| to the sale of house, mortgage is a much better option. | | | | Thus, utilizing pension for repaying mortgage will not be |
| You continue holding the house and living there for as | | | | much burdensome to the borrower. |
| many years as you want. | | | | Endowment method of paying off mortgages will utilize |
| The only problem however is that the loan provider | | | | the amount saved by borrower in an endowment |
| has kept lien on home to himself, and keeps using it as | | | | policy over a period. Since, the endowment policy will |
| a stick to exhibit what can be the consequences of | | | | be invested in shares and stocks; there are chances |
| being irregular on the mortgage repayments. In the | | | | of the endowment fund growing profitably. Similarly, |
| worst of circumstances, when the borrower has not | | | | there are chances of the endowment fund not faring |
| repaid the mortgage, the loan provider has the right to | | | | properly and resulting in loss to the borrower. |
| repossess home. | | | | Mortgages are commonly classified into three, |
| What can the borrower do in such circumstances? | | | | depending on the borrower and the purpose for which |
| There is not much to do once the loan provider has | | | | it is being used. A first time buyer mortgage is for the |
| made up his mind to repossess home. Recovering | | | | borrowers who are buying house for the first time. |
| home from the loan provider in such cases will be | | | | Mortgage terms may differ for this kind of borrowers |
| much more costly. | | | | in order to incorporate the relative weakness of their |
| A more effective solution to the problem would be to | | | | finances. These borrowers become eligible for |
| go by the rules. Continue paying as much has been | | | | discounted rates of interest. |
| decided between you and the loan provider, and try to | | | | Another classification of mortgages is buy to let |
| be disciplined in repayments. | | | | mortgage. Buy to let mortgage, as the name suggests |
| This isn't as difficult a solution as most of us will think. | | | | will be for borrowers who already have a home and |
| The following illustration would make things clearer. For | | | | they want to use the new home for letting out on hire. |
| a person who earns a monthly income of ₤100, | | | | A distinct feature of this type of mortgage is that the |
| it will be difficult to pay ₤30 at a time. However, | | | | borrower will pay monthly installment through the rental |
| when he is required to pay ₤1 over a period of | | | | received. |
| 30 months, it will be relatively easier. The monthly | | | | Finally, there are council right to buy mortgages. Council |
| installment method of repaying mortgages uses the | | | | right to buy mortgage are for the people who have |
| same concept. The borrower will be required to pay a | | | | been living as council tenants. They have got an |
| monthly installment every month. This goes towards | | | | opportunity to buy the council home. Because of the |
| amortising the mortgage balance over the specified | | | | lack of personal resources, they use the council right to |
| term. | | | | buy mortgage. |
| There are other methods for paying off the mortgage | | | | Because of the home serving as collateral, interest |
| too. Among the alternative methods, interest only | | | | rate is at an all time low on mortgages. Always seek a |
| mortgage repayment is the most important. An interest | | | | mortgage from prestigious loan providers in the UK. |
| only mortgage repayment method allows borrower to | | | | The quality of the mortgage deals arranged by them is |
| pay only interest on the mortgage. Thus, at the end of | | | | excellent. Also, there is no fear of several additions to |
| the term the balance remaining unpaid is the amount | | | | the mortgage in the form of extra fees. |
| actually taken. How the balance of the mortgage will | | | | We have always stressed on the need for good |
| be repaid at the end of the term will further categorise | | | | decision making on mortgages. Good decision making |
| mortgages into pension mortgage and endowment | | | | ensures that mortgage is safely repaid and the worst |
| mortgage. | | | | fear of losing home on repossession never comes |
| Pension mortgage employs the pension for disbursing | | | | true. |