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Top ten mortgage tips
Top Ten Tips When Choosing a Mortgage

Choosing a mortgage can be of the most intimidating experiences in life. This is especially true if you are a first-time buyer. There are two main parts to choosing a mortgage:

  1. How to choose your mortgage

  2. How to choose your mortgage lender

Here are top ten tips to consider when choosing a mortgage.

1. Consider your personal circumstances.

In order to choose a mortgage that fits you, start by thinking about your lifestyle and individual needs and wants. Are you:

  • A first time buyer?

  • Buying to let?

  • Buying overseas?

  • Already a home-owner looking for a home equity deal?

  • Self-employed?

  • Looking for a better interest rate?

  • Looking to remortgage?

  • Earning big bonuses but have a small basic salary?

2. Understand the different types of mortgages on offer.

It is vitally important to know the basic benefits and disadvantages between various mortgage types when choosing a mortgage. The main types of mortgages rates include fixed and variable rates, capped rates, discounts and tracker rates, repayment, or interest-only mortgages. Each one has its pros and cons and will appeal to different borrowers at different stages in their life. 

3. Do not borrow more than you can afford.

Like many borrowers, you may be tempted to overstretch your budget to get the house of your dreams. There are very real dangers to this, so it is essential that you set a realistic budget when choosing a mortgage.

4. Shop around.

There is generally a great deal of choice and competition between mortgage lenders. Make the effort to contact and discuss your requirements with a select handful of mortgage lenders. Carefully look through every mortgage package on offer. Take your time to decide which mortgage deal would best suit your lifestyle and budget when choosing a mortgage.

5. Do not accept the first mortgage on offer.

Do not be lazy by taking the very first mortgage that is offered to you. There is no denying that choosing a mortgage can be a complex and time-consuming affair. However, when you shop around, you will find there are significant savings to be made, possibly amounting to thousands of pounds. If you accept the first mortgage on offer, you could lose out on a considerable amount of money in the longer term.

6. Do not be tempted by low starting interest rates.

Many borrowers are attracted to low interest rates when deciding how to choose their mortgage or mortgage lender. These deals are normally not as good as they appear. Many mortgage lenders lure you in by offering low headline interest rates. However, the majority of these low interest deals are inflexible and may tie you in for the long term. When choosing a mortgage, it is much better to calculate how much a loan will cost by considering the Annual Percentage Rate (APR).

7. Beware of exit or redemption penalties.

Nowadays, many lenders impose heavy penalties if you wish to:

  • Repay your mortgage earlier than initially agree

  • Exit from the mortgage and move to another lender or deal

These penalties can range from one month's interest to a shocking 12 month's interest in some cases. When choosing a mortgage, avoid mortgage deals which carry harsh penalties.

8. Beware of mortgages with overhanging lock-ins.

Some lenders impose a penalty, called an overhanging lock-in, if you switch deals or lenders after a special deal interest rate has expired.  These deals tie you in; you may save money initially, but you may be paying out more in the long run—something to keep in mind when choosing a mortgage.

9. Consider extending your mortgage period.


Choosing a mortgage with a longer than average term can have advantages, especially for first-time buyers. Traditionally, borrowers have been advised to repay their mortgage as soon as possible. However, house prices are so high these days that it is becoming more acceptable to have mortgage terms of 40 or even 50 years.

10. Always read the small print!

Before signing on the dotted line, always read and understand your lender's terms and conditions thoroughly. 

Keep these tips in mind and choosing a mortgage that's best for you should be a breeze!

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