Items Tagged With home loan

To make a success of obtaining, or changing, a mortgage it's important to develop the same attitude as the lenders and brokers themselves. In particular, it's vital that you think of mortgages as 'products' - items that are bought and sold.

Seems odd, I know, but that's exactly how banks, lending houses and, increasingly, building societies think of mortgages - packages of money that are bought and sold.

Today, a lender 'buys' blocks of money in the market at the best price that it can (i.e. borrows at the lowest possible rate over base). It then 'sells' that money to customers (i.e. lends it out) at the highest possible rate that it can get. The difference is the profit that the lender makes.

As a happy shopper hardened in the white heat of the consumerist 21st century, your job is to buy at the best price you can. That means finding out who's offering what and when.

As someone just about to take on the biggest debt of your life you need to know EXACTLY how to find the best product AND how to apply it to your best advantage. Structuring your mortgage to its optimum cost-effectiveness is ESSENTIAL, IRRESPECTIVE OF HOW GOOD A PRODUCT YOU TAKE ON. The best interest rate applied carelessly will still end up costing you more per month than is absolutely necessary.

There are many ways you can buy potatoes. At the local corner shop or in the out-of-town supermarket. Ready washed in small bags or unwashed by the half-hundredweight. Bakers or roasters. Named or unnamed.

A lot of potential decisions, but often people just "buy a bag of tates whilst they're out shopping". Those in-the-know will buy very specifically because they understand the taste and texture benefits they'll get from a clever purchase. Those who haven't a clue will take what's on the shelf.

Or, to put it another way, why buy a house?

You will probably have seen it written, or heard it said, many times before - a mortgage is the largest debt you'll ever take on in your life.

Put that way, it's a frightening prospect - one that should only be considered under circumstances of dire necessity. Yet we treat obtaining a mortgage as a great accomplishment - something almost to be celebrated. I well remember the TV adverts that portrayed different people when they first received the news that they'd got the mortgage they were hoping for. Their reactions ranged from subdued excitement to outright ecstasy! None of the ads portrayed those same people going out to work, day in, day out, to pay the damn thing off!

Why do we treat mortgages this way?

Almost certainly because having a mortgage means 'owning' our own home, which, like getting married and having children, is something we think our parents would like to see us do. Seen as "taking on a huge great debt that's going to be hanging like an albatross around our neck for the next quarter century", perhaps those same parents wouldn't be quite so enthusiastic about the whole thing!