Monday, January 21, 2008

The Basics of Mortgages

Many people are confused with the word mortgage. I know I am and the first time I came across this word is while playing Monopoly ™ . Since most of the time I am the "banker" I need to read up and explain the rules of Monopoly ™ to my siblings. So it seems that if a player has little cash but lots of property, he can mortgage his property for some cash.

So how does this translate in real life adult world? To put it in simple terms mortgage is a legal agreement between borrowers and lenders. With mortgage a borrower can borrow money from any loan lending organization and give them the right to repossess his property, used as guarantee, if he fails to pay-off the loan amount. I guess when it involves our homes and properties, this is where it can confused and overwhelmed us. So it is best that we know at least the basic about mortgage before embarking on this procedure.

There are many types of mortgage depending on our personal circumstances and ability to repay the mortgage. The main types are fixed rate mortgage where you pay a fixed monthly payment in a fixed period of time, variable rate mortgage has fixed rate of interest for a fixed period of time that is bound to change in future and many more.

Get the right mortgage rates to see if they suit your circumstances and financial management best. In addition to this, you may want to find out if there are any extra costs such as application fees, valuation fees and surveys, solicitor's fees, insurance and so on. Get the help of mortgage brokers or bank institutions to help you make well informed decisions and to avoid the negative effects of mortgage.

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