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Repayment Mortgage
A repayment mortgage is a term generally used in the UK to describe a mortgage in which the monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest, so that the amount borrowed decreases throughout the term and by the end of the loan term has been fully repaid. This contrasts with an interest-only mortgage (such as an endowment mortgage or some types of balloon payment mortgage) where monthly repayments are for interest, and the borrower must repay the full loan at term in a lump sum. One advantage of a repayment mortgage is that it removes the risk of having an investment (as exists in an endowment mortgage), the performance of which is dependent on the stockmarket. The borrower is also less likely to suffer from negative equity because the mortgage balance will be reducing month on month. As time moves on, the equity percentage in the property increases. However, in the early years the bulk of the mortgage repayments consist of the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotland, Wales and Northern Ireland. The United Kingdom includes the island of Great Britain, the north-eastern part of the island of Ireland, and many List of islands of the United Kingdom, smaller islands within the British Isles. Northern Ireland shares Republic of Ireland–United Kingdom border, a land border with the Republic of Ireland; otherwise, the United Kingdom is surrounded by the Atlantic Ocean, the North Sea, the English Channel, the Celtic Sea and the Irish Sea. The total area of the United Kingdom is , with an estimated 2020 population of more than 67 million people. The United Kingdom has evolved from a series of annexations, unions and separations of constituent countries over several hundred years. The Treaty of Union between ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mortgage Loan
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is " secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property (" foreclosure" or " repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word ''mortgage'' is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Interest-only Mortgage
An interest-only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest-only period. At the end of the interest-only term the borrower must renegotiate another interest-only mortgage, pay the principal, or, if previously agreed, convert the loan to a principal-and-interest payment (amortizing) loan at the borrower's option. By country United States In the United States, a five- or ten-year interest-only period is typical. After this time, the principal balance is amortized for the remaining term. In other words, if a borrower had a thirty-year mortgage loan and the first ten years were interest only, at the end of the first ten years, the principal balance would be amortized for the remaining period of twenty years. The practical result is that the early payments (in the interest-only period) are substantially lower than the later payments. This gives the borrower more flexibility because the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Endowment Mortgage
An endowment mortgage is a mortgage loan arranged on an interest-only basis where the capital is intended to be repaid by one or more (usually Low-Cost) endowment policies. The phrase "endowment mortgage" is used mainly in the United Kingdom by lenders and consumers to refer to this arrangement and is not a legal term. The borrower has two separate agreements: one with the ''lender'' for the ''mortgage'', and one with the ''insurer'' for the ''endowment policy''. The arrangements are distinct and the borrower can change either arrangement if they wish. In the past the endowment policy was often taken as an additional security by the lender. That is, the lender applied a legal device to ensure the proceeds of the endowment were made payable to them rather than the borrower; typically the policy is assigned to the lender. This practice is uncommon now. Reasons for an endowment mortgage The customer pays only the interest on the capital borrowed, thus reducing the monthly p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Balloon Payment Mortgage
A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity.Wiedemer, John P, ''Real Estate Finance, 8th Edition'', p 109-110 The final payment is called a ''balloon payment'' because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate.Fabozzi, Frank J. (ed), ''Handbook of Mortgage-Backed Securities, 6th Edition'', p 1125 A balloon payment mortgage may have a fixed or a floating interest rate. The most common way of describing a ''balloon loan'' uses the terminology ''X'' due in ''Y'', where ''X'' is the number of years over which the loan is amortized, and ''Y'' is the year in which the principal balance is due. An example of a balloon payment mortgage is the seven-year Fannie Mae Balloon, which features monthly payments based on a thirty-year amortization. [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Negative Equity
Negative equity is a deficit of owner's equity, occurring when the value of an asset used to secure a loan is less than the outstanding balance on the loan. In the United States, assets (particularly real estate, whose loans are mortgages) with negative equity are often referred to as being "underwater", and loans and borrowers with negative equity are said to be "upside down". People and companies alike may have negative equity, as reflected on their balance sheets. History The term negative equity was widely used in the United Kingdom during the economic recession between 1991 and 1996, and in Hong Kong between 1998 and 2003. These recessions led to increased unemployment and a decline in property prices, which in turn led to an increase in repossessions by banks and building societies of properties worth less than the outstanding debt. Since 2007, those most exposed to negative equity are borrowers who obtained loans of a high percentage of the property value (such as 90% or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
UK Mortgage Terminology
This article gives descriptions of mortgage terminology in the United Kingdom. Introduction The UK mortgage market is one of the most innovative and competitive in the world. Most borrowing is funded by either mutual organisations (building societies and credit unions) or proprietary lenders (typically banks). For a number of years the market operated with minimal state intervention, although this changed at least temporarily following the 2008 nationalisation of Northern Rock, which at the time was one of the country's largest mortgage banks. Since 1982, when the market was substantially deregulated, there has been substantial innovation and diversification of strategies employed by lenders to attract borrowers. This has led to a wide range of mortgage types. Mortgage types Ways to repay the capital * Repayment mortgage – in principle, and other things being equal, a flat amount is paid to the lender each month, which covers the interest due for that month on the outstan ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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