Mortgages From the Past and the Present

Gone are the days when mortgages were difficult to come by. If you want to buy a house, it is likely that you will be overrun with proposals from all kinds of finance companies and loan providers as they try to entice you. Each loan provider will advertise to you, the best possible loans that they have on offer. If you are hoping to sniff out cheap mortgages, just relax. Most loan providers have an array of loans and mortgages to suit the budgetary needs of the buyer of a house.in the world today it is hardly possible to support all our necessities directly from our savings. Loan providers understand that and are willing to furnish you with the ideal mortgage offer. Over the years we have seen various developments in the world of personal and housing finance. One type of home loan that had emerged some time ago in the United Kingdom was the endowment mortgage.

Although endowment mortgages are relatively unpopular now, there was a time when people were of the opinion that this was a terrific deal. Endowment mortgages allowed people to pay only the loan amount every month. Would this really end up generating profits for the loan company? When taking out an endowment mortgage, the borrower was required to take out a life assurance policy for the period of the loan. These mortgages involved long term commitment and the duration was usually about twenty-five years. How did this help? The interest-only policy allowed the borrower to save up enough to repay the loan. However, if he was unable to do so, the life assurance policy that he had taken out would help repay the mortgage.

Sounds very straightforward doesn't it? However, there was one tiny glitch. Now, the repayment of the loan would depend on the endowment funds. Thus, it became necessary that the funds into which the investments were made should perform well. Of course, one can never know when things will start going downhill.

After the initial popularity of endowment mortgages in a flourishing market where people actually got bonuses over and above their investment, there was bound to be a shift. A swing towards the wrong direction came in the early 1990s, when the UK markets plunged into recession. There was a major market collapse which adversely affected many endowments. The disaster was so bad that companies had to revert to repayment mortgages.

Endowment mortgages have never got over that debacle. And why should they? After all, the markets are snowed under with all kinds of attractive loans. Decide on what kind of a loan you are looking for, and arm yourself to deal with a flood of loans from the loan companies.

By : Ajeet Khurana