 How
to Find the Best Mortgage for your First House Purchase
Once you have decided to buy your first house your goal
is not only to find the best rates but also to find the
best mortgage to suit your circumstances and plans for
the future. It is a good idea to sit down and write out
your plans especially if you are planning to buy the house
with a friend or partner.
Are you going to buy a small flat to get on the housing
ladder with the intention of trading up to a larger house
later or can you afford to buy a large house now? Do you
intend to both work full time for the length of the mortgage
or do you intend to have a career break and go back to
college or perhaps you plan to have children in a few
years time? A mortgage is a long-term commitment so some
initial planning could save you time and money.
When you have your plans on paper calculate how much of
your savings you will have towards the deposit. Don't
forget to put aside money for the other costs in buying
your home such as solicitor's fees and stamp duty and
work out how much you will need for furniture and fittings.
Finally write down your salary and any other sources of
income, as this will influence how much you will be able
to borrow. Traditionally most lenders would allow you
to borrow up to three times your salary plus the salary
of a second purchaser but with todays low interest rates
and high house prices a few lenders have raised their
limit to five times the first salary. If you are planning
to take advantage of these loans make sure you are able
to cover the payments if the interest rates go up.
Now that you know roughly how much you can afford is the
time to start searching for the right type of mortgage
for you. Your individual circumstances will dictate the
type of mortgage you should have. There are two main types
of mortgage a capital repayment and interest mortgage
and an interest only mortgage.
A capital repayment mortgage is where the interest and
the capital are calculated upfront and paid in equal instalments
throughout the term of the loan. This type of loan is
best for someone who is planning to stay in the house
for a number of years this is because in the first few
years most of the repayment goes towards paying the interest
and only a tiny amount comes off the capital sum. So if
you move after a few years you will find that very little
has been paid off of the amount borrowed.
An interest only mortgage is where you pay only the interest
and a separate policy such as an endowment, ISA or pension
plan to pay off the capital amount at the end of the mortgage
term. Endowment mortgages have had a bad name in the past
as investments performed less well than expected and the
endowment policies were returning sums much less than
the amount they were supposed to cover.
Once you have decided the type of mortgage to suit your
needs it is very easy to go online and search through
a huge number of lenders products, and save yourself thousands
of dollars on mortgage payments every year, but also,
to save time and hassle by simplifying the loan process
and reducing the paperwork.
About the Author
Carol Bell is the Author and Webmaster for http://www.good4mortgages.co.uk
where you will find more information on mortgages. We
also have many articles on mortgages on our other website
http://www.amazingarticles.co.uk |
