When you are buying home for the first time, or if you already have a mortgage and are considering changing mortgages, it can be important to pick the right mortgage. This can be a daunting task because there are a lot of different mortgage providers. However, if you are clear about what you are looking for in a mortgage providers then that should help you to be able to more easily find one.
It is a good idea to start by working out the cost of particular lenders. Some people might just compare the interest rates, but it can be a good idea to actually think about the full cost. This is because they may be some other fees as well, such as set up fees or admin charges that you will have to pay. Add it all up and then you will be able to do a proper comparison between the different lenders and see which will be the most expensive and which will be the cheapest. It will take a bit of an effort, but it is worth it and you will also be aware of the fees, which could be a lot higher or lower than you expect.
It will take a lot of time to work out the full cost of every single lender. Therefore, it is best to start by looking at interest rates, just like you would with regular borrowing and then look at the ones with the lowest interest rates to see what their fees are as well. Alternatively, you could ask them to let you know what their AER is. This is a percentage rate which includes costs as well as interest (Annual Equivalent Rate).
It is also a really good idea to find out how much you will be expected to repay each month. You will need to think about what you can afford and whether the mortgage repayment will be an amount that you will be able to cope with. It is really important to do this as you could get in serious problems if you start finding that the mortgage payments are too expensive for you. Therefore, you not only need to check and make sure that you can afford them now, but also think about whether you will still be able to afford them if the interest rates go up. If you have a fixed rate mortgage this will not happen until the fixed rate term ends, but if you have a variable rate mortgage, then it is possible that the rate might go up and then your repayments will be higher as a result. You will need to be sure that this will be something that you can afford.
The term means that amount of time that the mortgage lasts. Mortgages tend to be 25 years but they can vary depending on how much you borrow and who you borrow through. Consider how long you want to be repaying for and whether the lenders you have in mind offer that. It is also good to think about whether you want to be able to repay early if possible. Some mortgages are flexible and will allow you to do this and others will not be. So, consider that as well.
Reputation of Lender
Many people also think about the lender themselves when they are choosing. They want one that they can truest. They might want to use one they have used before, one that their friends and family recommend, one that has good reviews, one that has a local branch or offers online banking and one that they have heard of. There are a lot of possibilities with regards to what you might want to think about with regards to a lender and some will be more important for you than others. It is good to have a think about what you want and then you will be able to match that up with what you can find.
This research will take some time but it is well worth it. When you take out a mortgage you are making a big commitment and because you borrowing such a lot of money, it can make a big difference if the interest rate is a little higher or the fees are a bit more. Also, because you are borrowing for such a long time, you also want to make sure you feel that the lender will be supportive and helpful all of the time. Of course, you will be able to switch lenders, but some will tie you in for a certain time period or have a fee for switching and the one switch too may also have a fee, so although it could save you a lot of money if you do switch, it is good to get it right first time if you can and only switch a few times if you need to.