Finance Banking

Mortgage Banking In Europe

Published at 07/19/2011 11:50:14

 Mortgage banking is seen as a way to be able to own a new house or even commercial properties easily as a one-time payment for a property is quite expensive. It is basically associated with taking out a mortgage loan to be able to finance a property for an ownership of a prospective buyer. Mortgage loans are large amounts which incur interest over time and usually end the payment term by 30 years from the date the mortgage loan had started.

 To start having a mortgage banking loan, an owner who has an interest in a prospective property must approach a lender who would be able to provide them with the mortgage loan. Lenders are oftentimes banks who provide mortgage loans for interested buyers, other financial institutions, or investors of the property such as real-estate companies. From here on, the original amount of the loan shall be provided as well as the interest rate which may have a fixed or incrementing rate. In most cases, a mortgage loan to be availed needs a borrower to be able to provide a down payment that may vary depending on the lender.


Mortgage repayment methods vary from country to country. In Europe, the usual method to repay a mortgage loan is by repaying the capital and the interest at the same time within an agreed span of time. This method is known as the capital and interest. This can ensure the borrower no obligation by the end of the term as opposed to the interest only payment basis. The interest only basis is very usual in the United Kingdom and the borrower will only have to pay for the interest but not the capital. The capital is then repaid by making an investment early on a repayment vehicle as soon as the term starts. There is high risk that the borrower may not be able to pay the initial capital as the repayment vehicle may not produce the sum needed to clear the remaining debt.


As mortgage loans are huge amounts of money, lenders may have to require their borrowers to own an insurance policy to protect the repayment of their loan. Personal accident or payment protection insurances are often required by lenders on their borrowers to ensure that the loan would still be repaid even in the event of an accident, sickness, or even their unemployment. However, they could only be required to get an insurance policy if the lender proves that their borrower may be prone to instability by means of a background check and that their remaining loan value from the start of the repayment is above seventy to eighty-five percent.

 Mortgages are protected by law in every country by means of government regulation and legislative agreements as well as registration of mortgage loans. This observes the right of a borrower and a lender in case disputes arise from the said loans. Disagreements on insurance requirement and faulty mortgage advice (if a borrower is working with a mortgage broker) are common disputes in mortgage banking.

Tips and comments:

 Mortgage banking is the most common means for people to own a property even in Europe. It is the quickest and handiest alternative of getting the resources needed in purchasing a home, especially for individuals who cannot afford to pay in full.


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