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Types Of Mortgages That Can Help Buyers In A Tricky Spot

Perhaps due to potential home buyers being concerned about the cost of purchasing a home, the U.K. housing market growth has slowed to the lowest rate in four years, according to The Guardian. Annual housing price growth fell from 3.2% in January to 2.3% by the end of February. This reluctance to purchase a home means property sellers need to work harder to ensure potential buyers have the right information about alternative ways their finances can be used to secure a mortgage, and purchase a home.

Adverse and Reverse Mortgages

These types of mortgages differ from other mortgages such as repayment, interest-only, fixed rate, and first time buyer mortgages, and are offered by organisations across the world. They can have great benefits that should be thoroughly explained to anyone you see who’s interested in buying a home.

Reverse Mortgage

This is also known as a lifetime mortgage in the U.K. and is an equity release scheme, allowing homeowners who are aged 55 or over to release some of the equity in the property. A home buyer may want to use this type of mortgage when they’re getting older. When using a lifetime mortgage, they stop paying interest each month. Instead it is ‘rolled up’ and added to the loan, increasing the debt gradually. This allows the buyer to receive the lump sum or regular income; however, this is dependent on the value of the property, and their age.

Adverse Mortgage

If the buyer is struggling, with bad credit for example, this is the type of mortgage they may be able to get. A lot of people believe that they are unable to get a mortgage if they have a bad credit score, but it is possible. These mortgages differ from a mainstream one as buyers will likely have to pay a higher rate of interest on the mortgage than is typical. Despite this, adverse mortgages are useful for people with poor credit, lower income, people who can only pay a small deposit, and the self-employed.

How Does This Affect You?

Buyers should receive good advice from a mortgage advisory service or property sellers. The goal should be to inform them, and ensure the advice is relevant to their situation. This can make all the difference when they’re looking into purchasing a home. If they’re older, or their financial situation is less than ideal, then they might not know about these two types of mortgages that could help them. All of this contributes to the continued growth of the housing market, something benefitting our industry.


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