Everything you need to know about mortgages

The best way to property finance

Property developers will still need loans to finance their projects. With super fast lending processes from private lenders, you can have your project up and running in just a few weeks. Private lenders will offer their own money to developers, making the process much simpler and faster than high street lenders and banks.


Bridging loans are one of the most popular types of finance options for developers and can help to complete a new purchase, buy development land, purchase properties at an auction and be able to afford building materials for large projects.


For finance options in the South-East of England, click here.


What is a mortgage?

For the purchase of a house almost everybody needs finance by way of what is called a mortgage loan.


This is secured by a legal charge, or 'mortgage', on the property. It is possible tc obtain mortgage loans from many sources in certain conditions - private investors, local authorities, insurance companies, and banks - but the vast majority of mortgage loans or residential property are provided by building societies.


What can a building society do?

Normally a building society will limit the amount it is prepared to lend on a property to 95% of the purchase price or of the society's own valuation if this is lower. For purchases uncle's £14,000 a loan of 100% is not impossible from some societies.


but in times of high interest rates and shortage of mortgage funds, loans of this proportion are unlikely. A purchaser would be wise to expect to have to put up at least 10% of the purchase price in cash from his own resources.


This amount happens to coincide with the amount that a purchaser will have to pay as cash deposit on signing the legal contract for the purchase. Find out more.

The maximum loan will also be restricted by the size of the prospective borrower's income. The purpose of this is to ensure that the paying of the interest and repayment instalments on the loan will be within the capacity of the borrower.

Credit Exercises

A Jill Anscombe decides to purchase electrical equipment priced at £250. She has insufficient money saved to pay cash and discovers the following alternative methods of financing the purchase:

(a) The shop offers hire-purchase terms of 20% deposit with the

balance payable over 30 months in monthly instalments. The total credit price is £3012.50.

(b) Alternatively the shop offers credit sale terms of £50 deposit

followed by 30 monthly instalments of £8.92.

(c) Her bank is willing to give Jill a personal loan for the purpose
Credit Exercises

Personal And Business Finance 2018

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