When choosing between different mortgage lenders and their products the following factors you should take into account:
- How much can you repay per month? Bear in mind that should the interest rate of your mortgage go up, you will be required to pay more. For those on tight budgets, a fixed rate mortgage may be better over the long term. It is also possible to remortgage to another product if rates become too high, but that itself comes with its own fees and charges.
- How large can your initial deposit be? Interest rates, length of repayment and repayment amounts all improve depending on how much deposit you have. While there are a number of 100% loan-to-value (LTV) mortgages available, you will get a better deal and have more choice if you have some sort of deposit.
- How much do you need to borrow? Mortgage lenders will allow you to borrow up to a certain amount depending on your income. This might be as much as four to five times your yearly income, but most lenders offer amounts between three to four times your income. Borrowing more increases can your monthly repayments and take longer to pay off.
- How long do you want to repay your mortgage over? A longer period of repayment can offer lower monthly payments but will also mean you pay more in interest over the course of the mortgage. The sooner the mortgage is paid off, the less you pay overall in most cases.
- How stable is your income? If you’re not confident in your job or feel your income might fluctuate for other reasons, then it may be worth either delaying taking out a mortgage or arranging a flexible mortgage that will allow more leeway in both good times and bad.
- What is your credit history like? Those with poor credit histories may find it difficult to find a mortgage. There are a number of options here. One is to repair your credit history before taking on a mortgage agreement, while another is to obtain a credit repair mortgage or similar product.
- What other savings do you have? Those with significant other savings who do not wish to invest directly in the mortgage may want to consider an offset mortgage or current account mortgage.
- Are you able to change mortgages often? If you are going to have the time to be on the lookout for the best deals, say by taking advantage of discount mortgages and swapping to better deals when their discounted rates expire, be sure to arrange terms and conditions that allow you to do that.
- Where do you live? Some local building societies and specialist mortgage providers offer preferential deals to those who live locally. It may be worth including this in any comparison you make.
For an Action Plan 'Choosing the Right Mortgage', click here and for a checklist of points to consider click here.
Top tips for choosing a mortgage can be found at bankrate.com/uk.
First Time Buyers
If you are a first time buyer you can find tips and advice at the following sites:
How much to borrow
An expalnation of how a lender decides how much you can borrow can be found at this link.
A mortgage affordability tool designed to give you an approximate idea of how much a lender might offer you for a mortgage, and if you could afford it, is available here.
Mortgage Calculators to work out what your monthly payments might be are available at the following links:
Compare Mortgage deals
Details comparing mortgage deals that are available to suit your requiremen are available at the following links:
Professional Mortgage Advice
Unbiased and qualified advice on mortgages can be obtained from Independent Financial Advisers (IFAs) who specialise in this market. They are the only sources who are legally obliged to offer independent advice that is not on a commission basis, and are not affiliated or tied to any company or product.
To help you choose a Financial Adviser, click here.
The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that regulates the conduct of financial firms providing services to consumers including the regulation of consumer credit and maintains the integrity of the UK’s financial markets.
The FCA have brought in new rules, known as the Consumer Duty, which set a higher standard of consumer protection in financial services. The Duty means you should get: the support you need, when you need it. communications you understand. products and services that meet your needs and offer fair value.
Further information on the Consumer Duty is available at the following links:
Almost all firms offering financial services in the UK must be authorised by The Financial Conduct Authority (FCA).
You should only deal with a financial services firm that is authorised.
If you deal with an authorised firm you will be covered by the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.
You can check whether a firm is authorised by searching the FCA authorised register.
Unfortunately there are firms that operate without authorisation and some knowingly run scams like share fraud.
If you are unsure check the FCA List of unauthorised companies.
To acces a step by step guide to make sure you are dealing with an authorised firm, and to protect yourself from fraud and unauthorised activity, click here.
A complete guide to all aspects of Mortgages is available at this link.