Choosing a mortgage
There are two types of mortgage available. These are called "interest only" (where you are only repaying the interest) and "repayment" (sometimes known as "capital and interest" because the repayments go towards paying back both the main loan and the interest). You can also take out a combination of the two.
When you choose a mortgage you will need to think about how much you want to borrow, how much you can afford, the repayment method, interest rate deals and special features of some mortgages.
You could use a mortgage calculator to find out how much your monthly mortgage repayments are likely to be. This can help you estimate the size of mortgage you can afford at a particular interest rate.
It is best to shop around for the most suitable mortgage deal available. You can do this yourself by dealing with a company directly. However, as each mortgage will have its own features and conditions, you may wish to get help from a mortgage broker who will be able to work out which mortgage product is best for you. After all, we all have different needs. You may be planning to stay in a house for thirty years, or you may be seeing it as a stop gap until you find your dream home.
Top tips
- As a first step, use price comparison websites to check out the best deals on mortgages.
- If you take out an interest only mortgage, make sure you arrange a savings or investment plan to repay your mortgage.
- Although, interest only mortgages might appeal to you as the monthly repayments are lower, remember that you would be relying on additional savings to pay off the capital.