Regardless if you are buying your first home or are moving from your present one, purchasing a house is one of life’s major financial and personal investments and when making an application for a mortgage you can quickly be confused by all the different choices lenders give you.
That is why, opting for the right mortgage is vital. To start with you should use a mortgage calculator to see how much you can afford. These are easily accessible online and give you a good idea of how much, your monthly repayment demands will be.
Quite simply a mortgage is a loan you get, from a loan provider, to invest in a new home. Reimbursement of this loan is paid monthly for the term of the loan, with interest, and if you fail to meet the monthly repayments then the loan provider has the right to foreclose and sell your residence to repay the charges that you owe.
There are a number of mortgages out there and your preference of mortgage will depend on what suits you. Here are just a handful of of the mortgage options available to you. New borrowers are more than likely to be presented a ‘Fixed Rate’ mortgage as are borrowers who are likely to re-mortgage. Fixed for a term of 2, 3 or 5 years this sort of mortgage is popular as the borrower knows exactly how much the monthly repayments will be for a fixed term. The only downfall with this sort of mortgage is that of the interest rates do fall significantly then they will be unable to take advantage of these as they are on a fixed rate.
A ‘Discounted Rate’ mortgage offers a discount off the loan companies standard variable rate mortgage for a set time, for instance two years. The borrower will pay approximately one percent less than the standard loan companies rate so will benefit in any interest rate cuts. One popular option is the ‘Tracker Rate’ mortgage tracks the banks base rate for a set time, from two to 10 years. The interest rate will be set to a preset percentage above the banks base rate for a given amount of time.
These are just a couple of the options available to you and it is vital that you understand fully all the conditions to the mortgage. It is standard with all mortgages that early repayment charges will apply as will part repayment charges. This also applies of you choose to switch lenders or indeed switch to another product by the same lender.
if you are currently applying for your first mortgage, and are confused on all the different options available to you, then contact cheap mortgage deals and self certified mortgages today.
