What type of mortgage suits me?
There are several factors to consider when deciding on the mortgage that is right for you. Firstly, you need to think about your attitude to risk. For example, a fixed rate will give you security of knowing what you’re paying each month for a period of time whilst a variable interest rate may be cheaper today, but should interest rates rise then so will your monthly payment.
You need to consider whether or not a lower rate today will remain better value, compared with the peace of mind of knowing your outgoings for a fixed period of time, even if these might be higher.
Next you should consider how long you are going to take a product for. Most mortgages are set up over a twenty five-year period. However, the interest rate you take is usually only determined for a period of two to five years (although longer term rates are available).
You should try to fit the period of your interest rate in with your circumstances or plans. For example, if you are intending to increase your share of the ownership of the property in five years’ time it might be appropriate to select a five-year product. Therefore, when you come to borrow more, you are free from your existing rate with your lender and will be able to compare its offer to rates in the whole of the market.
Equally, one of you might not be working (looking after a child or dependent relative for example) and you know that in the next few years they will be going back to work; this would mean that your expected household income is going to improve and you will be able to review your financial arrangements in a few years’ time, so a shorter term product might be more appropriate.
Remember that lowest cost does not mean the most appropriate. Frequently lenders will advertise headline interest rates that appear extremely good value; however, often these deals make up the “undercut” interest rate through increased upfront fees or charges.
Our qualified advisors are trained to ask you questions and make you think about your needs and your circumstances, so that you select the right product for you.