Choosing the mortgage that is right for you.

There are many different types of mortgages with a plethora of features and fees. Choosing the right kind of mortgage based on your life style could not only make it easier for you to repay the loan but also save you thousands of pounds.

First, make an honest assessment of your financial position. Do you have a stable job? If you are in business, does it yield you a regular profit? Calculate your gross income. If you have a very low income that deters you from saving anything then you would do well to opt for a low deposit mortgage. If your income is good enough to have allowed saving for a deposit its better that you make as a high a deposit as possible. The less you owe the better.

Another consideration is; are you sure that you can repay your mortgage after a sudden loss of employment? On the other hand, if you as a couple are repaying together, what if your spouse loses their job, can you still manage it?

A longer amortisation period (30years) would mean that you pay a smaller amount monthly that would be lighter on your monthly budget. Also, remember that you pay a higher amount of interest therefore a larger amount overall in the case of mortgages that are spread over longer periods.

A shorter (15years) amortisation period would mean that you pay a larger monthly instalment, but a lower amount of interest and hence a smaller overall price for the house.

A job that pays you bonuses, or retirement benefits where a lump sum amount is expected can be helpful in making large regular payments or repaying the entire mortgage sooner if you can save during the mortgage term.

Choosing between a fixed rate loan and one with an adjustable rate is always a gamble. If the fixed rates are low now, it could be better to go for that option. The choice between an adjustable rate and a fixed rate mortgage is based on the wider economic outlook, whereas the choice of mortgage size is more dependent on your current financial situation.

Mobility is another factor that has to be actively considered when deciding on a mortgage. Will your job require you to move away from your desired place of residence to another? Do you see yourself growing out of the house in say 4-5 years? Alternatively, you may intend to stay where you live, foreseeably for the rest of your life.

A short stay may not work in favour of buying a house at all, unless rent prices in the area where you choose to live are higher and property prices are appreciating fast.

It will be assumed here that you have thought long and hard about the kind of property you have decided to buy. Just make sure that you are entering into a debt with a complete understanding of all the pros and cons.

Talking to us will help you reach a better understanding of your overall financial commitment because we are duty bound to ensure that you meet the affordability checks that all UK lenders expect.

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