Mortgages, Choosing the Right One for You

By: carolyn

The term mortgage describes the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay back the full value immediately.

There are many different type of mortgages around today all claiming to be the best for you but which one do you actually choose? And where do you even start looking? When it comes to choosing your mortgage you need to do so based on the best solution for your individual situation and your individual needs. You need to choose the mortgage that will best suit you financially and that will save you money in the long run.

Below are a few examples of some of the different types of mortgages that are available to you:

Flexible Mortgage
This type of mortgage allows you to alter your repayments to suit your situation, allowing you to decide what you will pay. This basically means that if you want to pay more of your mortgage off one month and less another month you could do so. This gives you the advantage of flexible repayments as well as being able to stop or reduce payments if you are going through a time of financial hardship.

Fixed Rate Mortgage
This form of mortgage payment has a disadvantage attached to it in the form of if the interest drops you will be tied into your higher rate until the end of the agreed period, meaning you won't see any decrease in your monthly repayments.

Current Account Mortgage
This works by combining your current account with your mortgage and, in effect, giving you a large overdraft. The advantage is that when your interest is calculated on the sum you borrowed, the funds you have in your current account are taken off the loan. Meaning if you borrowed ?100,000 and you have ?3,000 in your account you'll only be charged interest on ?97,000. So you could end up paying off your mortgage quicker.

Variable Rate Mortgages
With this you will pay the lender's standard variable rate of interest. This is linked to market conditions, which means that if the Bank of England puts the interest rate up - it's likely your rate of interest will as well. If you do go for this you may gain if interest rates drop because your payments will follow suit and you could end up saving money on your mortgage.

Cash Back Mortgages
By taking out this mortgage you will be given a lump sum back once your mortgage is complete. This money will either be a set amount or a percentage of the amount that you have borrowed. You should be aware, however, that if you are planning to take out this mortgage that it does come with restrictions in the sense that if you pay your mortgage back within three or five years then your cash back must be repaid.

These are simply just a few of the mortgages that are available for you but remember when it actually comes to choosing your mortgage you should speak to an advisor before making any decisions.

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