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UK.
Mortgages and Re-Mortgages
Different Mortgage Types and Interest Rates
There are two fundamental types of mortgages available in the market today. One is a Capital Repayment Mortgage and the other is an Interest Only.
OVERSEAS MORTGAGES
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If you require finance to purchase an Overseas Residential property, then CCC Financial, have many years experience in arranging this type of mortgage facility. Commercial loans also considered on a case-by-case basis. CCC Financial are UK based Licenced Credit Brokers and are registered for any applicable UK Mortgages by the Mortgage Compliance Board.
CAPITAL REPAYMENT MORTGAGE - This is a mortgage where your normal monthly payments will comprise of two parts, the interest due on your account and a payment towards reducing the capital. During the early stage of your mortgage the payments are predominately made up of interest, while in the later stages a higher percentage of the repayment contributes to repaying the capital.
In simple terms this means that each time you make a payment on your mortgage account the balance of your mortgage will reduce and providing all repayments are made on time, at the end of the mortgage term your mortgage will be paid off.
INTEREST ONLY MORTGAGE - A mortgage where normally none of the capital is paid off until the end of the mortgage term. This means that you simply pay the interest due on your account on a monthly basis. For Example you borrow £50,000 over a 25 year mortgage term on an interest only basis. At the end of the 25 year term the balance outstanding will be £50,000.
If you have an interest only mortgage you need to make provisions to ensure that at the end of your mortgage term you have an amount available to repay the balance. This is usually through the use of savings e.g. pension, insurance policies e.g. endowment, investments e.g. ISA, an inheritance or even by selling the property.
Typical mortgage terms are usually 5 years, 10 years, 15 years, 20 years, 25 years & 30 years
TYPES OF INTEREST RATE PRODUCTS
VARIABLE RATE - On a variable rate mortgage the interest rate will vary from time to time. This is usually as a result of changes in the cost to our lenders of borrowing the money that they lend. In the event of an interest rate change, your mortgage provider will notify you in writing of the exact interest rate change and how it will affect your monthly payments, before any increase or decrease in the rate of interest occurs. This type of variability is generally linked to the Bank of England Rates.
FIXED RATE - A fixed rate mortgage means that the interest charged to your account will not change for a set period, which is known as the 'fixed rate period'. This gives you the security of knowing exactly what your monthly payments will be for the agreed fixed rate period. When the fixed rate period ends, the interest charged will usually become a variable rate or the lender may offer another fixed rate.
DISCOUNTED RATE - On a discounted mortgage the interest rate charged to your account will be a set amount below the variable rate for an agreed period. Like the variable rate the interest rate will change from time to time. When the discounted period ends the interest rate will revert to the variable rate.
CAPPED RATE - The main advantage of a capped rate mortgage is that the interest rate charged to your account is guaranteed not to rise above a specified level, known as the cap, during an agreed time period. This gives you the security of knowing that throughout the capped rate period the interest rate cannot go above the cap, yet it may reduce below it. At the end of the agreed capped rate period the interest rate will become the variable rate.
EARLY REDEMPTION PENALTY - If you have taken advantage of a special mortgage product like those mentioned above, the lender may require you to keep your mortgage with them for a period beyond the date the special interest rate ends. They may charge a penalty if you were to redeem part or all of your mortgage within that time period. Your enclosed mortgage illustration will detail any Early Redemption Penalties relating to the product quoted.
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Introducing Halal Mortgages
Manzil Murabaha
Is a “deferred finance sale”. Manzil Murabaha based mortgage you identify the house you wish to purchase and consent to a buy. The mortgage lender buys the house and instantaneously sells it to you at a price that is based on the value of the property, the term of purcahse and the balance of your initial payment. Your initial payment is considered your deposit, this is about 20% of the purchase value. The house is then placed in your name and the transaction between you and the money provider is set down in a Manzil Murabaha agreement. You then make monthly payments to the money provider and when the balance of the contract is paid, you own the property.
Now have a selection of faith-based mortgage ideas to enable you to buy your home or finance an ordinary mortgage with a Halal mortgage which is Riba free and Shariah compliant.
All Halal mortgages are subject to lenders terms and conditions - some Halal mortgage options are not available in Scotland.
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