Which type of mortgage is best for the average homebuyer?
Deciding which mortgage is best for you depends largely on your attitude to risk! For example, a fixed rate mortgage is slightly more expensive than a variable rate mortgage, but it protects you from interest rate hikes for a period of two to five years. Other mortgages are more risky but cheaper.
The most common type of mortgage isn't always a safe bet
The most common mortgage on the market is the variable mortgage, which offers low interest rates and is available everywhere. However, variable rates aren't always a safe bet because if interest rates rise, you could struggle to meet your monthly payments and if they fall, the lender might not reduce its rates.
The UK mortgage market is in the best shape it's ever been: all kinds of lenders offer all kinds of mortgages, and no matter what your requirements someone, somewhere will be happy to lend you cash. Thanks to the Internet, borrowers are better informed than ever before.
Unlike variable rate mortgages, which the bank can vary at will, a tracker mortgage is guaranteed to follow the ups and downs of interest rates usually the Bank of England base rate. If the rate falls, so do your payments but if it rises, your mortgage costs more.
Getting a mortgage for a property you want to rent
You can't use a normal mortgage for a buy to let property; for that, you'll need a dedicated buy to let mortgage. The good news is that more and more mainstream lenders are happy to lend money for buy to let properties, but don't count on a 100% mortgage.
Finance a Spanish holiday home without leaving the UK
Spanish banks have a slightly different approach than UK banks when it comes to getting a Spanish mortgage. For a second home, lenders are unlikely to offer more than 80% of the property value, and borrowing is based on how much you earn compared to the repayments.
Life isn't easy for entrepreneurs, but things are improving
Getting a self employed mortgage isn't easy: there's much more paperwork and you might find that lenders won't give you their very best deals. However things are improving, and if you shop around you can still get a good deal on your mortgage without paying through the nose.
Until recently, anyone who couldn't prove their income self-employed people, temp workers, people paid in cash and so on was treated like a leper by mortgage lenders. That's changed, and a growing number of firms will offer you a self certified mortgage including some big names.
Get a mortgage without supplying busloads of paperwork
Getting a mortgage usually means providing lots of paperwork to the lender such as payslips, P60s and bank statements. It's even worse if you're self employed or have an irregular income. With a self certification mortgage you can avoid most of the hassle and most of the paperwork.
Self employed? Irregular income? Consider a self cert mortgage
A self cert mortgage short for self-certified is ideal for the self-employed or anyone with an irregular income. Instead of payslips and P60s you simply tell the lender what you earn but the increased risk means you won't be offered a 100% mortgage.
A second mortgage doesn't replace your mortgage; rather, it's an additional loan that once again uses your home as security. Banks like them because they're safer than unsecured loans, but payment protection is strongly recommended, because if you fall behind on the repayments you could end up in serious trouble.
Watch out for dirty tricks by unscrupulous lenders
Most firms that provide right to buy mortgage schemes for council tenants are perfectly reputable, but the Office of Fair Trading has taken action against some firms who have tried to scare people into applying for a mortgage. If in doubt, talk to your nearest Citizens Advice Bureau.
If you've had a mortgage for a few years, you're probably paying too much. A remortgage enables you to get a better deal from your lender or from a different one. You can also use a remortgage to raise extra money for home improvements or to pay off debts.
Self employed? You could be heading for a mortgage headache
A self employed mortgage is a problem mortgage: the same information your accountant uses to help you pay less tax can actually prevent you from getting a decent mortgage deal. Look for lenders that want to know your gross income, not the net.
One of the latest products on the market is the pension mortgage, which is good for high rate taxpayers but very risky too. Think of it as an interest-only mortgage that relies on your pension plan to pay off the initial money you've borrowed.
Buying a holiday home could be simpler than you think
If you've always dreamed of a villa in Spain or a holiday home in southern France, then an overseas mortgage will be ideal for you. You don't need to visit a specialist lender to arrange one as many big-name banks will help you finance foreign purchases.
Put all your money eggs in one basket to save money
An offset mortgage is actually a smart idea: by combining your current account, savings and your mortgage, you could pay significantly less interest on your repayments. It can save you a lot of money, but you'll also lose interest on your savings.
Mainstream lenders don't like the idea of a non status mortgage. Due to the fact that you have no credit history, it's hard to decide whether you're a safe bet or a big risk. Yet many non status borrowers are perfectly respectable in fact, some of them are simply good with money.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
This site is intended for UK residents unless otherwise stated. We offer a free, independent and impartial service. We are not affiliated with any lending institution. All rates are subject to change without notice. Please check all rates and terms with your lender or financial adviser before undertaking any borrowing.