Mortgages – More Than Just a ‘Dead potential’
Most people in the UK are familiar with the information mortgage; but how many know exactly what the information method and how mortgages work?
The information mortgage is derived from the French language and literally method “dead potential”. It was based on the fact that early mortgages were settled upon death, at which point the obligation to the lender ended – either because it was fulfilled or the character was repossessed.
These days, throughout much of the western world a mortgage is the main financial mechanism used to buy a home. A modern residential mortgage entails the potential of character as security to a lender in exchange for a loan to buy the character. By taking out a mortgage the cost of buying a home can be spread over a number of years, and a lender provides the funds to buy a house, which the mortgagor would not otherwise possess.
In the UK approximately seven in ten people own their homes, most using a mortgage at some point to get onto the character ladder. By comparison, in Germany that figure is just over four in ten, and in Denmark, which was recently voted as the ‘happiest place on earth’ only half of the population own their homes.
There are many different types of UK mortgages, and those obtainable in the market place at any given time vary according to common economic conditions. For example, during 2006 mortgages offering 100% or more of the character value were widely obtainable throughout the UK. However, following the onset of the credit crunch during 2007 such products were little by little withdrawn and by mid-way by 2008 were not obtainable from any reputable high street lender.
However, in any case the state of the mortgage [http://www.barclays.co.uk/mortgages/] market, the most shared UK mortgage is the Standard Variable Rate (SVR). The interest rate on this kind of mortgage varies dependent upon the Bank of England Base Rate and the policies of the lender. Other types of mortgage products include fixed rate and discounted mortgages. Such products typically include a pre-agreed number of years during which the interest rate is either fixed at a particular rate, or discounted against the SVR. But, once that period expires, typically between two to five years, the interest rate payable on the loan reverts to the SVR.
Other types of mortgage products are also obtainable such as tracker mortgages, but generally the types of mortgages offered by lenders depends upon the state of mortgage market at the time. Because the availability of mortgage products varies from month to month anyone considering taking out a mortgage to buy a character would be well advised to seek specialized advice before committing to a particular product and lender.