Which Mortgage Is Right For You?
There are all sorts of different mortgages available so it can be difficult to know
which one is right for you but here is a quick breakdown of some of the most common types and some top tips on how to choose.
The most common types of mortgage are:
Cash back mortgage This is a lump sum which is usually given to cover the costs of things like valuations, legal costs and any other applicable fees and this type of mortgage is often complementary to another type of loan or mortgage.
Fixed rate mortgage This type of mortgage is popular with first time buyers in particular as the monthly repayments stay the same throughout the term of the mortgage (which can be anything from one to 25 years) even if the lenders rate goes up. The security of a fixed term mortgage makes it a popular option for those that like to budget each month as there are no nasty surprises around the corner.
Capped rate mortgage A capped rate mortgage is similar to a fixed rate mortgage in that it offers a level of security that something like a base rate tracker mortgage cant give you. With a capped rate mortgage the rate of interest may well go up or down from one month to the next but it will never go above the rate agreed with your lender.
Discounted mortgage This type of mortgage is great for those who follow the patterns of interest rates and think that the rate may well fall in the first few years of their mortgage as no matter whether interest rates rise or fall your agreed discount will still apply. A discounted mortgage can be a good way of ensuring you have a little bit of spare cash to spend each month, which is attractive to those wanting to do home improvements.
Base rate tracker mortgage A base rate tracker is a great idea if you think the Bank of England is likely to lower interest rates and keep them low for the duration of your mortgage and if this happens you can save a lot of money. With this kind of mortgage you are subject to the economy rather than lenders rates and its important, as with all mortgages, to find the right one for you.
If you need to remortgage or switch mortgages or if youve got adverse credit, trained and authorised brokers can still help so dont worry unnecessarily or jump in before you know what all your options are.
Top tips:
- Only deal with FSA regulated companies when researching and organising a mortgage.
- Do you homework and research and make sure the type of mortgage you choose will suit you in the future as well as in the present.
- Check all rates, repayments and small print and always seek professional advice before signing anything.
by: Jamie Francis
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