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Mortgages

Finding the best mortgage for you

Your mortgage is probably the largest financial commitment you are likely to make. We recommend you seek mortgage advice which is tailored to your individual needs and requirements.

Today, lenders are in competition with each other for your valuable business. They will offer incentives to entice you. But beware, you don't want them to trap you into staying with them when the incentive has lost its shine!

We strongly believe that a significant proportion of borrowers could save money by re-mortgaging. This is simply because most lenders target new customers rather than existing ones.

When you first took out your mortgage you may have been offered a competitive special rate, which will revert to your lender's standard variable rate once the initial special rate period ends.  This usually results in your mortgage payments increasing.

We suggest that every borrower, especially those with a good repayment history considers re-mortgaging, though there are some catches you should be aware of. Re-mortgaging may incur fees and involves some paperwork. The most attractive products usually have  large application fees and redemption penalties that tie you into that product for a set period. Despite these reservations, the savings made can be considerable.

There are so many types of mortgage available that it is easy to confuse them, possibly opting for the product offering the lowest headline rate of interest. But when booking and arrangement fees, conditional insurances, higher lending charges, lock-ins and early repayment charge are taken into account, the products may not be as attractive as you may have first thought.

Ways to repay your mortgage

There are various ways to repay your mortgage. Here is a brief outline of the more popular repayment methods, and their advantages and disadvantages.

Repayment mortgage - Your monthly payment includes the interest due and an element of Capital.

Interest-only mortgage - You only pay the interest on the loan throughout the term. You are advised to take out a separate investment product to repay the capital at the end of the term.  

Three well known types of interest-only mortgages are:

   * ENDOWMENT MORTGAGE

   * PENSION MORTGAGE

   * INDIVIDUAL SAVINGS ACCOUNT (ISA)

With all these ways to repay your mortgage, then (with the exception of the repayment method),regular reviews should be carried out to ensure you have sufficient funds to repay your mortgage loan at maturity.