Buying a new home can be quite a daunting and stressful task, as there are so many hoops to jump through and paperwork to sort. To help simplify the process, we are providing some helpful mortgage advice to take the stress out of purchasing a new home.
The deposit you pay on a new home will determine your monthly mortgage outgoings each month or the length of your policy. The more you pay up front, the less you will pay each month. So, if you want to reduce your monthly expenditure, we recommend saving up a big deposit before you invest in a property.
Consider Household Costs
You might be able to afford a new home, but can you actually afford the household costs? There’s more to owning your own home than just paying for a mortgage, gas, water and electricity. In the UK, you will be required to pay council tax and home insurance. You will also need money for food, other insurance policies, TV packages, furnishings and things like window cleaning services. Add up your monthly outgoings each month against your income to identify if you can afford to commit to such a lengthy mortgage policy.
Find a Mortgage Broker or Independent Financial Advisor
While you can apply directly to a bank or building society for a mortgage, a mortgage broker or independent financial advisor can help you identify the best mortgage policy for your needs. It is recommended to take advise before you start with mortgage proceedings, unless you have significant financial experience.
Choose Your Mortgage Type
There are a variety of mortgages you can apply for. If you opt for a repayment mortgage, you will pay off part of the capital each month, which will typically last for 25 years. However, if you opt for an interest-only mortgage, you pay only interest on the loan and nothing off the capital – but this type of mortgage is becoming less common, as lenders can sometimes be left with a huge date and no means to make the repayment.
Fixed and Variable Mortgage Rates
A fixed rate mortgage can be both a blessing and a curse. They typically last for 2 to 5 years and you can decide to select how long to hold onto a fixed rate. This means you will pay a fixed rate for two to five years on your property – which can be either a good or bad thing depending on the current interest rates. If you have a variable mortgage rate, the price of your mortgage repayments will be determined by the Bank of England base rate.