How to know you're choosing the right mortgage
There is more to choosing a mortgage than finding the lowest interest rate. There are a few questions you should ask when comparing products to make sure all the features of your new mortgage will suit your requirements.
Does this product’s interest rate suit my finances?
Deciding between fixed and variable rate products is a primary point of consideration when seeking a new mortgage. If you have a largely flexible income, and know that your finances can withstand fluctuating interest rates, you may find that you are better suited to a variable rate mortgage. Common variable rate mortgages include tracker mortgages and capped rate mortgages. If you wish to retain greater control over your budget from month to month and want to protect yourself from possible interest rate rises, you should consider a fixed rate mortgage.
Is this product suited to the size of my deposit?
It is important to find a mortgage product that suits the size of your deposit. Often you will find that the most competitive mortgage products are only available to borrowers with a deposit of around 20% or more.
Have I considered the long term implications of this product?
Most mortgages consist of two separate periods packaged up into one product. The introductory period of the mortgage runs for around 1-5 years, and commonly consists of an interest rate discount. This discount rate is called the headline rate; and is followed by the second part of the mortgage, which is usually significantly more expensive. This means that in the short term mortgages can be very competitive, but they become less so over time. As a result it is very important to consider each mortgage product as a whole, by paying attention to the cost for comparison APR when comparing options. You should also make sure there are no conditions attached to the mortgage that will prevent you remortgaging if you wish to do so at the end of the introductory offer in order to take advantage of a better rate with another lender.
Is this product flexible enough for me?
The flexibility of a mortgage product can greatly affect your repayment options. This is important if you want to have greater control over the way you repay your mortgage. Many mortgages allow underpayments, overpayments and payment breaks, which can allow you to vary your repayments to suit your finances. Taking full advantage of a flexible mortgage product can greatly reduce the amount of interest you repay overall.
Please note: this website, and the articles and information within it are based on journalistic research. It does not and should not be construed to constitute financial advice. Any information should be considered in regard to specific circumstances. All tips are followed at your own risk and should be followed up with your own research. For more please refer to our terms and conditions of use.