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How to choose the best mortgage for your particular needs

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This guide outlines the factors in choosing that best mortgage for your individual situation.

There is no denying that getting a mortgage is a huge point of celebration for many home owners all across the country. However, it can seem that the journey towards buying property is similar to getting stuck in a web of financial and legal jargon. Trekking through the financial jungle can leave you feeling lost, but this article should help you find – and stay on – the right path.

How to choose the best mortgage for you

Having a clearer understanding of what kind of mortgage works best for you will relieve some of the stress from what can be a very confusing process. Nobody wants to gamble such a large amount of money away by making uninformed decisions. So you have to make sure you are making decisions that serve you in the way that they need to.

What is a mortgage deal?

To put it as simply as possible, a good deal is a beneficial financial arrangement you make with your lender. This agreement will cover the rate of interest you initially have to pay, and the length of time you must repay this rate over. 

There are a variety of deals available, but distinguishing between them is difficult. Working out what mortgage deals work for you is something you should discuss with a mortgage professional, like the people at PBS Mortgage Solutions, but it is still good to enter into the conversation informed. 

Read through the following information to get an idea about what the types you might be eligible for: 

Fixed Rate Mortgages 

As you would probably expect, a fixed rate mortgage refers to a deal that has a fixed interest rate for a set amount of time. This doesn’t necessarily mean that the same interest rate will apply for the entire loan period – but that your interest rate will be fixed for a set initial period. This makes monthly repayments consistent and predictable for the length of time for which the rate is fixed. With a fixed rate, you will know what you need to pay back each month for some time into the future. 

Tracker Mortgages 

Tracker mortgages follow a rate based on the Bank of England’s base rate for borrowing. This is the rate you will regularly see referred to in the news. A tracker mortgage is a good option for those with occupations that are very likely to feel the brunt of economic recessions, as the repayments will drop during these times. But it is also important to consider that interest rates will rise when the economy is on a positive trajectory. 

Discounted Mortgages

Discounted mortgages fall into the variable rate mortgage market, and generally start with a lower interest rate than fixed rate ones. Once you come to the end of the period for which the discount applies, you will start paying at the standard variable rate. Therefore, if you are offered a discount mortgage that fulfils this characteristic, you will be able to repay much less money on a monthly basis. 

Variable Mortgages

With a variable rate mortgage, the level of interest is not fixed, and you borrow at a variable rate of interest over the life of a loan. This is appealing as there is a chance you will have a low monthly repayment. But it also comes with the risk that your repayments may rise with interest rates. 

Offset Mortgages

An offset mortgage involves using your savings accounts to balance out, or offset, the amount you owe . Lenders will deduct the amount you have in your savings from the amount you need to repay. You therefore only pay interest on the remaining amount. 

This could help you achieve pretty substantial savings in the long term. However, it is worth considering that any savings you use for your offset mortgage will not attract any interest.  

How do you get the best mortgage deal?

A mortgage is a huge and substantial expense, and one you need to take a lot of time thinking about. Secure a good mortgage deal that works in your favour by considering your personal circumstances and how comfortable you are taking financial risks. 

These considerations include how much deposit you have saved up, your personal financial circumstances, your willingness to pay a higher arrangement fee, and how much you can afford to pay back monthly. 

How Can You Strengthen Your Mortgage Application? 

It is really important to put a lot of thought into the type of mortgage you want to be offered. It will give you some time to plan in advance so you can make a strong application and increase your chances of being accepted. 

Unsurprisingly, if you have a particularly strong mortgage application, you are more likely to be offered the mortgage agreement that you want. A number of factors go into making a strong application may take a variety of forms, but fundamentally,  a considerable deposit will add greatly to the strength of your mortgage application. So you should save as large a deposit as possible before you start the buying process. 

What are Mortgage Fees? 

Another cost to consider is that of mortgage fees. These are the fees you have to pay when you take out a mortgage. The arrangement fee is simple to understand. It refers to the cost that a mortgage lender will charge for arranging your mortgage. This does not always apply to all mortgages. Whereas there are no arrangement fees for some mortgage agreements, others have fees ranging from a few hundred to a couple of thousand pounds 

The valuation fee is the cost of valuing your property for the purpose of the mortgage. This is important because it gives you the peace of mind that the property you want to buy is worth the amount you are going to pay, and at least what the lender is willing to let you borrow. 

This means you can go through the transaction confident that you are getting value for money. Similar to arrangement fees, valuation fees are levied at a lender’s discretion, so, sometimes, you won’t be charged for them. It really depends on the property and the agreement you have with your lender. 

Another fee to consider is that of the booking fee. This is a fee that is usually paid upfront. As you would probably expect, a booking fee refers to the cost of adding your mortgage loan to the lender’s book at the end of the application process.

Why Should You Use a Mortgage Advisor?

As you have probably gathered, mortgages can be confusing and convoluted topics. Combining this with the size and importance of the transaction, and you could easily be overwhelmed by it all. 

This is why reaching out to an advisor is critical to avoid the many pitfalls and to make sure you are getting the best deal. A mortgage advisor can talk you through your mortgage options in a way that is easy to understand.

Conclusion

Buying a house is a hefty expense – probably the biggest of your life  but don’t be tempted to cut corners by not using a mortgage advisor. Their knowledge is extremely valuable, they are experts in their field. They can save you significant time by searching the housing market and helping you by recommending the best deals for your particular situation. 

Also read: How to find cheap home insurance: best strategies