Sources of Finance and Types of Mortgage

Question 1

What is money needed for in property transaction?

Answer 1

1. Cash to pay deposit
2. Balance on completion
3. Agreed price for any extras
4. Tax
5. Solicitor’s fees, which will be subject to VAT
6. Solicitor’s disbursements

Question 2

What is commercial funding?

Answer 2

• May raise equity finance
• A syndicate (group of lenders)
• Development finance

Question 3

What are the types of mortgages?

Answer 3

1. Capital repayment – pays off balance with added interest. At the end of the term, will be paid in full
2. Interest only – only pays the interest, and the capital can be paid off over time but may remain outstanding. But may be good, as at end of the term, the increase of value could cover it