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Trend of Mortgage Loans In U.K
Mortgage loans are long term loans. These loans are provide against property to earn interest income. The interest rate in mortgage may change from time to time and it may be fixed too. Mortgage loans are basically of two types such as fixed rate mortgage or adjustable rate mortgage. In fixed rate mortgage interest rate remains the same but in adjustable rate mortgage interest rate keep on changing.
Mortgage loans are very popular in U.K .there is great competition in market for mortgage loans. The credit unions and propriety owners are providers of mortgage loans. There is no interference of government in market. there are various kinds of interest rates available in market such as;
- A fixed rate; where the interest rate remains same for a fixed period. Long term loans are more costly so short term loans are more popular.
- A capped rate; A particular limit is set for this kind of loans and interest rates can not rise above them. These are almost similar to fixed rate. Sometimes a minimum amt can also be associated to fixed rate which is called collar rate of interest.
- A discount rate; A discount rate is that rate where there is fixed marginal reduction for particular period in interest rate.
- Cash back mortgage -In this mortgage a lump sum amount is paid in advance.
- Sometimes lender offers money at very low rate of interest than market but in that case he charges penalty
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