For most people, getting a mortgage – and having your mortgage application approved – is an essential step towards securing that property. Properties are, after all, expensive, and for most people it will be the single most expensive investment they will ever make. But getting a mortgage can be quite difficult; choosing the right kind of mortgage can even be harder. In fact, choosing the right kind of mortgage can make a big financial difference over the years. So how do you choose? How do you tackle the various challenges? Here are some quick and essential facts on mortgages, and what you should be looking out for.
The different kinds of mortgages
There are truly many kinds of mortgages out there, but they can basically be divided into two categories: those with the fixed rates and those with tracker rates. This refers to the type of interest rates and how they will affect your monthly payments. A fixed rate means there is one interest rate that will apply for the whole duration of your mortgage. A tracker rate means that interest may (and probably will) fluctuate during the mortgage duration, based on the Bank of England’s base rate interest policies.
Why is it important to know between fixed and tracker interest rates? Because it will greatly influence your monthly payments. If the banks offer you a low fixed interest rate, you may want to accept that – but if you see interest rates are high, you may want to opt for the tracker rate in the hope that interest rates will go down. Consult an expert regarding fixed and tracker interest rates – they could make a big difference.
Your deposit is important
The greater your deposit, the greater your chances of getting that application approved, for three simple reasons: you show commitment, you lessen the burden of the bank, and you will probably get lower interest rates on the remainder. Start saving early.
Staying within budget
Think not only of present expenses, but also of future ones. Do you plan to have children or buy a new car? Think of a modest monthly payment and stick with it. Be safe. You may have to agree to a longer mortgage term, but at least you’re sure you won’t be missing any payments.
You should always remember that the bank – or any other financial institution – will consider your mortgage as an investment. They are, after all, in it to make money. Always think of your mortgage as a business deal, so make sure you are happy with that deal and that there’s a win-win situation for everyone. Always seek the advice of experts (like mortgage brokers Colchester from reputable firms like Flagstone.co.uk) especially if the whole prospect of getting a mortgage seems a bit intimidating to you.