Seeking the best mortgage means matching your personal circumstances to the right product, there is no one size fits all and do not let mortgage advisers fit their products to you. With UK mortgage the choice of a fixed rate mortgage or one with a variable interest rate.
The best choice depends on your own circumstances and to an extent on interest rate levels at the time, but things to consider are:
- Can you afford to have your payments go up each month? This could happen with a variable rate mortgage.
- Are rates generally low at the moment? It could be a good time to get tied into a fixed rate mortgage.
- Do you want the security of a fixed monthly payment for several years? Fixed rate periods from 1 – 10 years are available.
- Are you having difficulty borrowing enough money? An interest only mortgage can mean lower monthly repayments ie you can borrow more against your salary. But there are drawbacks
To understand which option will suit your circumstances, discuss your options with a mortgage specialist, who will advise you on suitable choices.
Repayment mortgages
Each monthly payment pays off a little of the underlying debt, as well as interest on the loan. At the end of the term the mortgage is cleared.
This is widely considered to be the most easy to understand and least risky mortgage type. But remember if you do not keep up with repayments the lender can repossess the property.
Interest only mortgages
With this type of mortgage, you pay-off the interest on the loan but not the capital. At the end of the mortgage term you are expected to repay the capital, how you fund this is your business.
Interest only mortgages have grown in popularity in recent years amongst buy-to-let investors and first-time buyers in particular because, put simply, they are cheaper than a repayment mortgage.
However, some experts are concerned that many people taking out an interest only mortgage are not giving enough thought as to how they will repay the capital.
Endowment Mortgages
You use an endowment policy to provide life insurance and save funds to repay the loan at the end of the term (usually 20-25 years).
If the investment performs badly, you could face a shortfall on your loan at the end of the repayment period.
Free Mortgage Advice
The Little House Company are working with some of the leading mortgage brokers in the UK. They are experts at finding exactly the right mortgage to suit your requirements. You will find that they can often find better mortgage deals than when an individual simply contacts a Building Society or Bank direct.
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