For most people their mortgage is the biggest financial obligation that they have and relates to their most valiable asset - their house. It is therefore vitally important that you choose the right mortgage, which means finding the best mortgage rates & the most suitable mortgage deals.
Here are the key things that you need consider:
1.Interest only or repayment?
Choosing between an interest only and repayment mortgage is also a vital first step when finding the best mortgage deals.
Interest only mortgages are usually cheaper than a repayment mortgage. However, you obviously have to consider that with an interest only mortgage you are only paying the interest due on your mortgage and therefore not actually reducing the outstanding balance.
A repayment mortgage will gradually pay off the outstanding balance of your mortgage as well as the interest you owe from your monthly repayments, meaning at the end of your mortgage you own your property and have nothing left to pay.
2.Choose a type of mortgage
There are literally thousands of mortgages on the market and what's on offer changes daily. However, the majority of residential mortgages come under one of three categories, Fixed Rate Mortgages, Tracker Mortgages and Discount Mortgages.
Each type of mortgage works slightly differently, offering various reassurances regarding their interest rates, which determines how much your mortgage costs.
There are also some other forms of mortgage:
If you have a substantial amount in savings you may want to consider an offset mortgage which would link your savings to your mortgage and mean you're only charged interest on the difference between your savings and the outstanding balance.
Another option is a current account mortgage which combines your mortgage, current and savings account into one account so you have more flexibility managing your money.
If you have poor credit then you may want to consider applying for a mortgage specifically tailed for people with bad credit. Although theses mortgages may be a little more expensive you will have a greater chance of your application being successful.
3.Compare interest rates
Once you've established how much you need to borrow and the type of mortgage you want to apply for, the next step is to search for the cheapest mortgage interest rates on offer.
Finding cheap mortgages is intrinsically linked to finding a low interest rate - as you will be repaying your mortgage back for several years it is the interest rate which will largely determine how costly each mortgage is.
There are lots of mortgage comparison sites that will assist you with this exercise.
4.Check the fees
You next need to check the fees associated with each mortgage that you are considering.
Although the interest rate applied to the mortgage is likely to represent the bulk of the cost, mortgage fees have started to climb in recent years.