Mortgage or not?

In our everyday life we keep hearing interest this, interest that. But how many of us ever thought about what interest is? From a borrower’s perspective interest is the difference between the amount of money borrowed and the amount of money repaid. While repaying the debt a borrower incurs so called interest expense. On the other hand, the money landing party earns interest revenue.

Mortgages are traditionally taken out over 25 years, 30 years at a push – but house prices have got so high that many would be homeowners have found themselves completely unable to get on the property ladder.

Mortgage lenders have found a solution – offer a mortgage over a longer term so borrowers can afford the repayments. The catch is – the borrower pays a lot more in the long run, and the lender’s profits increase exponentially!

That’s why consumers who are considering taking out a mortgage with Northern Rock should examine the deal first with extreme care; Newcastle Building Society has advised to take a full research.

The group said that if you currently re-mortgaging, you should carefully examine what is being offered and to read the small print – as there may be more competitive products elsewhere.

The group notes that the bank’s announcement that it will downsize the business could result in job losses. However, it concludes that it is to create some 500 new jobs by the 2012 “as part of our continued growth strategy”.

One of the key aspects of it is you must trust the mortgage before doing some business with them.

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