Choosing the right mortgage for you need not be a nightmare. While there is a lot of financial jargon to get your head around, choosing the right mortgage is not a difficult task. Once you have all the facts, you will be in a fantastic position to ensure that your financial commitment is a viable one. In fact, you will be so spoilt for choice; you won’t know which one to choose.
Choosing the perfect mortgage is easy, once you have a no-nonsense guide to help you along the way.
What Can You Afford?
While your dream home may be a five bedroom pile in the middle of nowhere, can you afford to buy this kind of property? Think about what you can reasonably afford. In the grand scheme of life, you don’t want to be indebted to your mortgage provider for the rest of your life. If you find the perfect house that is cheaper than what you are allowed to borrow, go for it. You don’t have to push yourself to the limit. This is a big financial commitment. Ensure that you are sensible so that you don’t find yourself caught short.
Remember; you don’t just have to pay the mortgage. You have to pay for all of your other expenses too. Council tax, water rates, gas and electricity all need to be paid too. Make sure that you borrow what you can afford.
Types of Mortgage: What Are Your Options
With so much choice, you may feel bamboozled. Do not despair. You will find the perfect mortgage option. Ensure that you don’t get railroaded into taking out a mortgage that you don’t want. Your mortgage provider has vested interests in your cash. Don’t let them make a decision for you. Letting agents in Norwich have stated that making a sound financial decision is the best way to find a great mortgage when you are giving up renting.
Let’s take a look at your options:
Option 1: Repayment Mortgage
This is where you pay monthly repayments for an agreed period, time and term. This could be over 20, 25 or 30 years. Of course, this is age dependent. You will pay back both the capital and the interest of the mortgage over your agreed time period.
One of the perks of this kind of mortgage is that you are safe in the knowledge of knowing that your mortgage will only get smaller. This is a popular option for many. Once your mortgage is paid off, the house is yours. No more payments. Now, that is something to look forward to.
Option 2: Interest Only Mortgage
As the term suggests, you only pay the interest on the mortgage for an agreed time period. During the term of your mortgage, you will only pay for the interest on a monthly basis. So, you will be paying less for your mortgage on a monthly period. However, you will still owe the money at the end of the term that you will have to pay. Think of this as a balloon fee. This is appealing for some, but not for others. What is more, you may need a higher deposit in order to secure this kind of mortgage.