There are several key things to consider when choosing your mortgage:
- How much can you afford to borrow and repay on a monthly basis?
- How long should your mortgage term be?
- Which repayment option is best for you?
- Which type of mortgage is most suitable for your circumstances?
How much to borrow
The amount you are able to borrow is dependent on a number of factors, so you will need to consider the cost of moving, your monthly income and expenditure and your credit history.
Your Mortgage and Protection Consultant can help you to find the right number of years (term) over which to repay your mortgage. If you spread your mortgage over a longer-term, your monthly repayments will be lower. However, please note that the longer your mortgage term, the more interest you will have to pay the lender.
There are two main mortgage repayment options available to you: repayment and interest only. The availability of both will depend upon your circumstances. Please note that part repayment part interest-only mortgages may also be available; your Mortgage and Protection Consultant can discuss this with you.
Types of mortgage
You have several options, each of which has advantages and disadvantages.
- The same monthly payments for the initial period (usually 2, 3 or 5 years).
- After this period, the rate usually reverts to a variable rate.
- Easy to plan as exact costs known.
- Payments cannot increase during the initial fixed period.
- During the fixed period, payments cannot decrease and early repayment charges may apply.
- The rate will be driven largely by the economy and the market.
- The lender decides their current rate, which you pay – this does change.
- You may benefit from rate reductions and pay less each month.
- No early repayment charges during the term.
- Rates may increase and therefore you will pay more each month.
- Hard to budget
Please see our downloadable First Time Buyer Guide to Find out more