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Mortgage Loan
Basic concepts and legal regulationMortgage loan typesLoan to value and downpaymentsValue: appraised, estimated, and actualEquity or homeowners equityPayment and debt ratiosStandard or conforming mortgagesCapital and interestInterest onlyNo capital or interestInterest and partial capitalForeclosure and non recourse lendingUnited States mortgage processPredatory mortgage lendingOption ARMCostsThe United States mortgage finance industrySecond layer lenders in the USCompetition among US lenders for loanable fundsThe mortgage loans industry and marketMortgage typesUK mortgage processMortgage insuranceIslamic mortgages
Basic concepts and legal regulationMortgage loan typesLoan to value and downpaymentsValue: appraised, estimated, and actualEquity or homeowners equityPayment and debt ratiosStandard or conforming mortgagesCapital and interestInterest onlyNo capital or interestInterest and partial capitalForeclosure and non recourse lendingUnited States mortgage processPredatory mortgage lendingOption ARMCostsThe United States mortgage finance industrySecond layer lenders in the USCompetition among US lenders for loanable fundsThe mortgage loans industry and marketMortgage typesUK mortgage processMortgage insuranceIslamic mortgages
Capital and interest
The most common way to repay a loan is to make regular payments of the capital (also called principal) and interest over a set term. This is commonly referred to as (self) ''' daily, yearly, or semi-annually; prepayment penalties may apply; and other factors. There may be legal restrictions on certain matters, and consumer protection laws may specify or prohibit certain practices.Depending on the size of the loan and the prevailing practice in the country the term may be short (10 years) or long (50 years plus). In the UK and U.S., 25 to 30 years is the usual maximum term (although shorter periods, such as 15-year mortgage loans, are common). Mortgage payments, which are typically made monthly, contain a capital (repayment of the principal) and an interest element. The amount of capital included in each payment varies throughout the term of the mortgage. In the early years the repayments are largely interest and a small part capital. Towards the end of the mortgage the payments are mostly capital and a smaller portion interest. In this way the payment amount determined at outset is calculated to ensure the loan is repaid at a specified date in the future. This gives borrowers assurance that by maintaining repayment the loan will be cleared at a specified date, if the interest rate does not change.