Mortgage Process Explained Step 1 - Seeing if you can qualify for a mortgage When you’re looking to take out a mortgage, there are a number of factors that can influence what you can borrow. • Your age (normally 21 years Old) • Your deposit (use the Deposit Calculator provided) • Your income (use How much I can borrow Calculator provided) • Your outgoings (Be honest so you do not over commit yourself) • Your credit worthiness (speak to your bank or mortgage lender) Step 2 - Choosing the right mortgage for you When you know how much you could lend you, youll need to consider the product that best suits your needs. There are a number of factors to consider when looking at setting up a mortgage. The most common product offered is based on the algebraic formula using the amortization process. (see Mortgage Calculator provided) Product Types • Own Occupier Mortgages • Investment Property Often referred to as Buy to let, the Investment Property is often a second home for landlords who are buying a property to let out to tenants. The property is bought as an investment in the hope that the propertys value goes up while the rent covers the mortgage. The amount that you receive in rent as an Investment Property should be more that the monthly mortgage payments and leave you enough left over to help with other costs such as agency fees and maintenance. The best investments are those where you make a profit on the rent after all the costs. Obviously, in some cases, the rent isnt enough to cover all your outgoings and you have to subsidize the property. When this happens you hope the rent will go up, mortgage bills will come down and the property will increase in value over time so that its still a good long-term investment. __________________________________ LOAN TO VALUE RATIO 80% __________________________________ MAXIMUM REPAYMENT PERIOD 20 to 25 years __________________________________ • Equity Release Equity release is a way for mature homeowners to release cash from the value of their home without having to move. Schemes are available to older homeowners and the older you are, the more youll generally get. Owning property means you can always offer it as collateral for a loan to cater for your other financial needs like home improvement, buying that dream car, medical costs or education fees. __________________________________ LOAN TO VALUE RATIO Depends On Own Equity __________________________________ MAXIMUM REPAYMENT PERIOD 20 to 25 years • Plot Loan The value of Land as an asset has always been understood by the financial institutions and banks as they regard it as a finite resource which usually appreciates over time. The repayment period is often a lot shorter than a mortgage. Residential Plot Loans are for people who want to develop a residential home upon the plot. Owning Land means you have collateral and it is considered a solid long term investment. ___________________________________ LOAN TO VALUE RATIO 50 to 70% ___________________________________ REPAYMENT PERIOD 5 to 10 years • Construction Mortgage A Construction Loan is a facility to finance the construction of a residential property usually managed by professionals who pay in stages to a person contracted to build the structure on behalf of the home owner. Stage management ensures that the project follows budget. A 10% contingency is often included for overspend and construction delays. Some Lenders allow Plot purchase and build at the same time. ___________________________________ LOAN TO VALUE 8O% ___________________________________ REPAYMENT PERIOD 15 to 25 years ___________________________________ • Islamic Mortgage It is against Islamic law to pay or receive interest, this has been a huge problem for Muslims living in Kenya. When it came to home buying it was only the very rich who could afford to buy a home outright. Fortunately however a few banks are starting to recognize this as a problem and are offering an alternative, as well as other forms of Islamic finance. When you find the house that you wish to buy, you arrange a sale price with the vendor as normal, however the bank pays the purchase price, then immediately sells the house to you at a higher price (the higher price is determined by the original price of the property, and the repayment period that you will have agreed with the lender), minus the percentage you pay as deposit. Products do vary slightly and you must seek further information from the Lenders. ___________________________________ DEPOSIT USUALLY REQUIRED Undisclosed ___________________________________ REPAYMENT PERIOD To be agreed with Lender Rates • Fixed • Variable Step 3 - Applying and what happens next Begin to process your application with your chosen product and financial institution. • Make your full application • Application Processed • Property valued (see House Price Calculator provided as a guide, seek professional valuation services) • Mortgage offer • Mortgage completes • First payment is made - Property Leo
Posted on: Sun, 03 Aug 2014 17:23:27 +0000
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