Purchasing a property is probably the single biggest investment you’ll ever make – so it will need to be right. This includes choosing a suitable mortgage that meets your needs. At Simple Financial Solutions we can give you professional advice on mortgages from a wide range of lenders.
By helping you navigate your way through what can often be a confusing aspect of buying a home, you will be able to choose from a handful of carefully selected mortgages rather than having to wade through the thousands that are on the market. The end result will be a product that fits your circumstances and represents the best deal available to you.
What types of mortgage are available?
Firstly, a mortgage is a loan that is given in order to buy a property. Due to its size, the loan is secured against your home to protect the lender in case you can't keep up with your monthly repayments (at which point the property me be repossessed).
There are several different kinds of mortgage available:
- Fixed rate mortgages: charge a fixed rate of interest for a set period of time, therefore if interest rates increase your payments won't change. An early repayment charge (ERC) usually applies if you want to leave the mortgage before the end of the fixed term.
- Variable rate mortgages: as the rate can go up or down your monthly payments could change over time. There are two types of variable mortgages: trackers and discounts.
- Tracker mortgages: as these are directly linked to the Bank of England base rate, what you pay will be determined by that (i.e. base rate + tracker rate = the rate you pay so if the base rate goes up, so will your payments). Again, you will get charged if you want to leave the mortgage before the end of the tracker deal (except for lifetime trackers where there is no fee).
- Discount mortgages: linked to the lender’s standard variable rate (SVR), not the Bank of England base rate. This means your monthly payment will change at the lender’s discretion – in fact, a number of banks and building societies have been known to put their SVRs up even though there has been no change in the base rate.
Arrangement fees are required for most mortgage deals and can often comprise of a non-refundable booking fee and an arrangement fee which you pay on completion of the mortgage. Both these fees need to be factored into the overall cost when choosing a mortgage.
What else do you need to consider?
The length of the mortgage (or ‘term’) is usually over 25 years however you can go for 20 or 30 years, for example. The longer the term, the lower the monthly payments however you will pay more interest in the long run. The shorter the term the quicker you’ll pay your mortgage off, therefore short is best assuming you can afford it.
The length of the deal also needs to be considered as it often costs a significant amount to get out of a deal you no longer want. However mortgages are often portable so you may be able to take your existing deal with you. Your mortgage can also be taken out on a repayment or interest-only basis. Repayment means you pay off the capital and the interest, while interest-only means you only pay the interest therefore you have to pay the full amount of the original loan at the end of the term.
So what now?
Please note: Simple Financial Solutions does not provide any assistance for Mortgages of any type at this time, these pages are for information only. Please check back soon.
BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME PLEASE CONSIDER YOUR SITUATION CAREFULLY. YOUR HOME MAY BE REPOSSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.