Different types of Mortgage 

A mortgage is also known as a loan or a secured loan taken on a property or a house that has to be paid back in a specific period. It can be considered as a personal guarantee to repay back the loan. This is done by the use of a document, which evidences the existence of the loan. In this case, it is the bank, some financial institution, or some direct or indirect intermediaries providing the money on the buyer’s behalf and the buyer has to repay it back in a stipulated time span.

A mortgage itself is not a debt; it can be called a lender’s security for the debt. The word Mortgage finds its origin from the French word, which means dead pledge. It literally means that once there is fulfillment of the obligation the pledge dies. 

This system of loaning has three mains participants namely the lender, the borrower and other participants. These other participants are mostly people associated with law like the solicitor or the lawyer who are required to play apart in the legal representation. 

There are different types of mortgages and it is most important to choose the right type of mortgage as per one’s needs. These come in various forms, types, and sizes. The major features of such loans are interest rate, maturity of the loan, size of the loan method of paying off the loan etc. Other features and characteristics may vary. It is quite a common practice in many countries to purchase houses and properties on mortgage loan. In countries where home ownership is strong and high, these markets have developed well and are thriving successfully. 

The Mortgages are of different types namely: 

1. Self-Cert type: in this type the borrower’s salary slips are checked, his annual income is calculated, and the lender provides a fixed multiple of borrower’s annual income. This type is called Self Certification Mortgage. These are primarily available to the employed and self-employed lot of people. This type of loan is for those people who have the money to deposit but have no proper documentation to verify their income. This type of loan is especially beneficial to people who have multiple sources of income. The cons in this type of a loan are that the interest rates are higher than the normal loans. 

2. 100% mortgages: In this type of a loan, the bank asks the borrower to pay some part of the loan towards the property as a deposit. This type of loan is specially designed for first time buyers, but has a higher rate of interest charged 

3. Together/ Plus Mortgages: This type of loan consists of package that is structured in a way so that 95% is the mortgage and 5% is an unsecured loan. 

Mortgaging has both advantages as well as disadvantages. Failing to return the stipulated amount to the lender will give rise to legal complications. This leads to delinquency. Hence, one should be careful of the mortgage package they select and make sure that the loan is paid back.