Buying a property is a big decision. Ongoing costs like mortgage repayments, bills and repairs can prove expensive. With a mortgage you won’t be able to sell the property until you pay it off and if you fail to make your repayments each month then your lender can repossess the property leaving you homeless. Without a mortgage very few people have the cash available to purchase a property outright.
Find a mortgage
Finding the right mortgage for your circumstances is important. You may want a fixed rate for the first couple of years to help you get used to the cost of running your own home or you may be happy to have a more flexible mortgage rate that is linked to the current base rate of interest. If you aren’t sure how much a mortgage company will loan you, there are plenty of websites of mortgage brokers available with calculator tools. Simply input your salary, the deposit amount you have, along with the number of years you want your mortgage to run for and a number of mortgage companies will appear with suitable loans for you. Most of these tools are free but do beware that some sites may charge for this service. Even a logbook loans calculator website which is designed for the purchase of cars can be used to give you an idea of how much you can borrow and what your monthly repayment amount might be over your chosen period of time.
Securing a mortgage before you find your ideal property means that when you do find the home you want to purchase you will be able to move quickly. Lenders often provide a “mortgage in principle” certificate which means they will agree, in principle, to lend you a particular amount of money before you actually take on the loan. This means when you do find the home that you want you can show the estate agent this certificate to prove you are able to make the purchase.
Mortgage interest rates vary depending on the amount of deposit you have to put down. The best rates are for around 85% of the purchase price meaning you will need to pay a deposit of 15% of the house price.
Taking on a mortgage is one of the biggest financial responsibilities a person can take on. Finding the right mortgage is key to you being able to keep the repayment amount as affordable as possible. Sometimes extending the period you want to borrow the amount for can reduce your payments but obviously paying the amount back over a longer period of time means you will end up paying more interest on the loan. Paying the mortgage off over a shorter period may be financially difficult for the period but as the period will be shorter then less interest is paid overall, meaning the overall cost of the mortgage is less. Again, looking at a mortgage calculator or a logbook loans calculator will give you an idea of the differences so you can make the best choice for your circumstances.
Written by Tom Brown, a freelance writer and business consultant. To find out more information visit this page.