Own a home With Home Loans

By: David Wilson

Having a shelter is the basic necessity of life. And one is really fortunate if he/she owns the shelter. Purchasing a home is on the financial agenda of many people. However, a home purchase is perhaps the costliest expense for a common man. It is not feasible for a common man to purchase his dream home with his savings/income. Financial assistance is more or less inevitable for a home purchase.

Home loans are designed exactly for this purpose. There are many banks and private lenders that offer a home loan to the UK citizens that assist them in buying the home of their choice. There are different categories of home loans depending upon the credit status of the borrower. They are A, B, C or D home loans. The 'A' category of home loan is devised for the prime borrowers, i.e those who have a perfect credit record. This category of home loans carry a comparatively lower rate as the borrower has a clean credit history. The 'B','C' and 'D' categories of home loans constitute the subprime financing designed to cater to the people who do not have a clean credit record.
The interest rate charged for these home loan categories will depend on:
credit score of the borrower
income level of the borrower
down payment made by the borrower

A borrower can expect to get better rates by reducing the amount and increasing the down payment.

There are different types of home loans depending upon the type of interest rate charged:
fixed rate home loan
The interest rate is fixed at a particular rate for a certain period of time as decided after a mutual consensus between the lender and the borrower.
reduced rate home loan
The borrower can avail the privilege of a lower rate if he/she does not sell the home or refinance the loan within the first 5 years.
adjustable rate mortgage (ARM) home loan
Usually carries a lower rate as compared to a fixed-rate. The low rate can be availed by the borrower for 1-7 years. Afterwards, the rate is adjusted depending upon the loan terms
split-rate home loan
Suitable when the interest rate is fluctuating
A combination of a fixed rate and an ARM home loans

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