Mortgages in Three Minutes

I know that talking about money makes you want to do this, but don’t worry I’m going to tell you what you need to know about mortgages in only three minutes. So let’s say you’ve seen the home you want, how do you go about getting a mortgage? Well, first of all you’regoing to need a deposit but before that sentence brings you out in a rash, some banks can offer deals with as little as a 5% deposit. But
the more you lay down, the better deal you’re likely to get. Then you’ll need to work out
what you can afford each month. What do you spend on food, clothing, going out? Then subtract
that from your salary, set aside some money for bills and the figure you end up with is
what you can afford. Then head online and search for a snappily titled mortgage affordability
calculator to tell you how big a mortgage you can get. Then it’s time to pick one. There
are two main options. Option one is called a fixed rate mortgage where you know exactly
how much you’re going to pay each month. The good news is if interest rates go up your
repayments stay the same. But if there’s a cut to interest rates your repayments won’t
fall either, meaning you’re no longer allowed to be the smuggest person in the room. Option
two is called a variable rate mortgage and the most popular type is a tracker mortgage
which tracks the bank of England base rate. The advantage here is the interest rate tends
to be lower than the fixed rate, but if the base rate goes up so do your mortgage payments
and suddenly you’re wondering how much you could sell your kidneys for. Your next decision
is how you’re going to pay that money back. Warning your home may be repossessed if you
don’t keep up repayments on your mortgage. Sorry, where was I? Oh yeah, most people choose
a repayment mortgage where every month you pay back the interest due as well as a little
bit of the captial borrowed so by the end of your term you’ve repaid your loan in full.
But there is another option which might be right for some people. This is called an interest
only mortgage. Your repayments are usually smaller because you’re only paying off the
interest on the amount you’ve borrowed. But you’re going to need some serious savings
because at the end of your term you’ll still have the full mortgage outstanding and you’ll
need to pay it off. Whichever you decide on it’s worth remembering these top tips before
you finally commit. Tip one, over 25 years your circumstances can change so what level
of flexibility might you need? Some mortgages let you over pay, some underpay, or even take
a payment break if you need to. Tip two, introductory offers usually last between one to five years,
but you can switch your mortgage at the end of the deal period. It may cost a few quid
in fees, but you could be better off in the long run. Tip three, you need to take fees
into account too. Most lenders charge something called a product fee. These vary in price
and can be added to your mortgage. Tip four, most mortgage deals have early repayment charges
if you pull out before the end date, so make sure you know what they are. And that’s mortgages.
If you’re at all unsure, get advice from an independent mortgage advisor or your preferred
lender. There’s no shame in asking for help, becuase a decision this big is much too important
to cock up. Bye bye.

Paul Whisler

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