The amount of mortgage approvals in Jan this year has risen by 4% to 39,230 and according to the figures released by the Bank of England, the rise in mortgage approvals might continue going up.

The total value of all the mortgages that were approved in Jan came to £4.6 billion which is an increase on the previous month of £900 million, however, this is only a small amount compared to the estimated monthly average of £1.6 billion or even as large as the February increase of £1.5 billion, although, the total sum of money approved through mortgages in Jan, £4.6 billion, was well over the monthly average.

There was also good news from the building societies, the amount of mortgages approved by building societies rose to £1,542 million, compared to the £742 million approved in February.

And finally, there were also figures released by the British Bankers Association regarding lending rates to small businesses. They said that their figures showed that lending to small businesses had risen by £271 million in Jan.This has had a knock on effect of reducing small business insurance premiums for many companies. However, these figures do not match with the results that the Treasury Committee released saying how small businesses are finding it harder to borrow money from the banks.

Although these figures sound good, mortgage approvals don’t really affect us now, it’s mortgage lending that’s more important and the actual mortgage lending in Jan rose by £800m which is alot less than the monthly average of £1.2 billion.

Although all of the above figures are good news for the housing market and economy, there are still worries how house prices could slump again, however, even if the house prices continue to rise, the economy is still in a very fragile state.

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It is very important to understand each mortgage term before you take out one. Unless you are aware what a particular mortgage term means it will be difficult for you to understand how the whole process works. Undoubtedly there is the mortgage broker and the mortgage lender to make you understand but you may not come across honest mortgage brokers or lenders always. And if they give you misleading explanations, you will not know since you don’t understand the subject well. In order to avoid such a situation, know the meaning of some of the important terms used in mortgage.

To start with, you should first understand the meaning of mortgage term.

1. Mortgage -It is a home loan that you take out against the property you are buying. It is desirable to make a down payment of 20% of the property value.
2. Mortgage interest rate – This is the amount you pay in percentage to the mortgage lender for using his money with which you buy the house. It can be fixed or adjustable.
3. Mortgage term – This indicates the time period within which you have to pay off your mortgage.
4. Refinancing – You refinance your mortgage when you take out another home loan to pay off the existing one using the same collateral usually at a lower rate.
5. Foreclosure – When you take out a mortgage, you are required to make payments each month. In case you are not able to make payments regularly and you default during the life of the loan, you lose your house in foreclosure. In other words, the mortgage lender will take away your home unless you pay his dues.
6. Mortgage APR – The mortgage Annual Percentage Rate is the total cost of the loan. You can use it to compare rates offered by different mortgage lenders.

Prior to taking out a mortgage be well versed in the mortgage terms so that you can avoid many unpleasant and unwanted circumstances.

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