Most people new to the property market only consider the down payment required as the major decision-making factor when it comes to choosing the right mortgage. The down payment is important, but other factors such as your attitude towards risk, and lifestyle are also important considerations.
The first step
The most important concern while choosing the mortgage is its paying back method. The basic paying back method is the repayment mortgage. It simply requires you to pay off a certain amount of money every month, together with the interest.
The other method is the interest only mortgage, where there is no need to pay off a capital sum. Although it reduces your monthly expenditures, it leaves you looking for ways to repay the amount borrowed, such as pension schemes.
The third interesting option of mortgage, available in the UK property market, is switching over from interest only route to the repayment method. This is usually recommended for first time buyers who expect their income to rise over time. However, it does incur much higher monthly costs.
Go for the best deals
You can either go for basic rates offered by lenders referred to as the Standard Variable Rate or choose one of the customized deals that provide more flexibility.
• Fixed Rates for mortgage is the most preferred deal for borrowers that are on a tight budget. Its most appealing feature is that it guarantees you the same amount of monthly payment for the product’s lifetime. It gives you peace of mind while availing similar benefits as with other deals.
• If you are looking for low interest rates for a specified period, usually the most recommended one is the discounted mortgage. Although it offers a cheaper headline rate, it is considerably a riskier option.