Who Provides Mortgages? Discover Your Options When Buying a Home

Most people who wish to own their own property will need a loan to make that dream come true. Even then, that home can be repossessed if the payments on the loan are not maintained throughout the life of the loan.

Here, we look at how the humble home loan originated and which elements you may need to consider if you wish to apply for one.

Who invented mortgages?
Home ownership is something everyone can aspire to nowadays. It may be harder for some than for others – often dependent on financial situation – but it is something everyone can consider. This was not always the case.

Few people have heard of a dead pledge, but that is the literal meaning of mortgage in French – ‘mort gage’. This dates to the 12th century. The idea was that a live pledge meant the person borrowing the money could pay off the debt using income gleaned from the land they lived on. The alternative, a dead pledge, was for them to find another way to pay back the debt. So, the name of this loan derives from a French term. This part of the process – the idea behind such a loan – has not changed in all those years.

However, while we can trace the beginnings of the loan back to the 12th century, it had largely died out two centuries later. We would then need to wait until near the end of the 1800s for the idea to resurface. This, perhaps not so coincidentally, was the time that building societies first appeared. As we progressed into the 20th century, home ownership started to become more common. However, it was not until the 1930s that it became even more widespread and led us to the situation we are in today.

When did mortgages first start?
We already have the answer to this one. We can point to the early 20th century for the explosion in home loans that led to where we are today. Few would ever have guessed the origins of the loan began some 800 years earlier!

Who does mortgages for bad credit?
In theory, regular banks and building societies may consider those whose credit rating is not as good as it could be. However, if you were accepted for a loan by one of these institutions, you would very likely be faced with much higher charges and interest rates.

Many people who are rejected by regular lenders do have an alternative means of applying for a loan, though. There are specialist lenders who focus on assisting those with bad credit. While higher interest rates will always be present for such loans, applicants may have a better chance of being accepted by such a lender.

It is worth noting that anyone with bad credit should do all they can to raise their credit score prior to applying for a loan. There are several things you can do to get a better score, such as paying off any existing debts you have and ensuring you correct any errors in your score that could be affecting it.

Who does mortgages on mobile homes?
Regular home advances cannot be used for the purchase of a mobile home. For a loan of this type to be granted against a property, that property must be listed with the Land Registry. This is not the case with a mobile home. Even if you paid cash to own the home, you wouldn’t own the land the home sits on.

However, this does not mean you cannot get a loan to assist you in your purchase. Again, specialist lenders are the best source of advice. Some lenders focus on just these types of homes, providing the chance to apply for a loan that will cover your purchase. Of course, you will need to prove you can afford the repayments on that loan, just as you would with a regular home advance. Be sure you do your sums prior to applying, to give you the best chance of acceptance.
Which mortgage provider will be the best one for me?
It is important to consider your options when you are shopping around for the right provider to give you the loan to help you buy your home. There are lots of different deals on the market, with various interest rates and fixed or variable terms in place. Just as you would shop around for the best deal on some clothing or a major purchase for the home, so you should also shop around to find the best-value loan you can.

For many, this means opting for a fixed-term deal that provides a good rate that will not change for the period the deal runs for. In a time when interest rates could rise, this provides stability. It is appealing for those who are keen to know how much they will be paying each month.

Is a mortgage worth it?
People have different opinions on this. Some believe investing in property is a good way to watch your money grow. Rising property prices over the long term usually mean you will end up investing in something that will grow in value far more than an investment in anything else. It cannot be guaranteed, of course, but many people have done well by investing in their own property over the years.

Others prefer to rent, however. They may see the sacrifices others make to get their own property and be able to afford a loan for one. They may believe those sacrifices are not worth it. Only you can decide whether getting a home advance would make sense in your life and situation. However, many would say it is an investment in your future. Rent money only buys you the right to stay somewhere for the next month. It does give you greater freedom, but perhaps only for a time.

Do millionaires have mortgages?
Surprisingly, the answer is usually yes. Most millionaires live in large properties with seven-figure price tags attached (sometimes going into eight figures). That means finding the cash to pay for them outright can be a challenge. This is truer still when you consider millionaires are often rich in assets but cannot lay their hands on enough cash to pay for a large property on their own.

However, millionaires don’t tend to go to local banks or building societies in search of loans either. They are typically members of private banks that are used to dealing with people with specific needs and requirements. Private banks loan the money needed to cover a property loan by considering the assets of that person. If they defaulted on the loan, how much would they have in assets to cover the outstanding amount? As such, many of the same elements come into play when assessing the suitability of that person for a home loan. It may just be that they come into play in a different way.

Published on 2 February 2020

See all posts in the Latest category