Deciding to take out a mortgage is one of the biggest financial commitments that you can make. It’s something that will be looming over you for most of your life. Therefore, it’s absolutely essential that you do not just into the decision without knowing all the details. You have to know what you are doing, and what it all means. We have provided some mortgage advice below for you to in order for you to understand it slightly better.
What is a mortgage?
A mortgage is a loan that is taken out from a lender in order to buy property. It is secured against the property that you purchase, meaning that if you fail to make the repayments you risk losing your house. It will be sold off to make the money back that you owe.
Where can I get one?
You can apply for a mortgage from a building society, bank or specialised mortgage lender. You should research what each of them offers, as some will be more suited to your unique situation than others. Once you have made that decision, the organisation you have chosen will check to see if you can afford it. They will also see how much the property is worth in order to find out if it’s really worth the amount you intend to borrow.
How do I pay it back?
There are two parts to a mortgage that will need to be paid. The first is the capital, the money you borrow, and the interest, the lender’s charge. The most common type of way to repay them both is monthly repayment. However, some companies will choose alternatives like interest-only payments. These comes with fixed or variable rates, which mean you will either be paying same fee for a certain time frame or a different fee depending on how interest rates are performing in the market.
How do I choose the right deal?
You will need to shop around to find the best deal for your mortgage. You may wish to see what your bank or building society can offer, or look at some of their competitors instead. It’s also worth checking comparison tables online to see who is currently providing the best offer. When doing this, you should consider the Annual Percentage Rate, flexibility regarding over-payments and the interest rates.
What if I want to get a mortgage as a landlord?
The type of mortgage that you need to get if you are a landlord is a ‘buy-to-let’ mortgage. You should always check with your lender that you are able to let out your property to tenants.
What if I have a bad credit rating?
Your credit rating is a factor in your mortgage, as the lender needs to know you can be trusted with repayments. However, there are some lenders out there in the market who focus on providing mortgages to buyers with a bad credit rating who have previously had trouble with loans or credit cards. These are known as sub-prime mortgages or adverse-credit mortgages.