I came acrosss some great mortgage advice recently and wanted to share it.
If you want to buy a house in Camberley, then heed the advice.
I am always here to offer mortgage advice, so please call me for a chat to see if we can take things any futher.
This advice came from the BBC’s watchdog programme.
Consider the two types of mortgage very carefully
Essentially there are two types of mortgage: interest only and repayment.
If you do go for an interest only mortgage, make sure that you have enough money to repay it at the end of the term. Look at your financial plan and current income and see if you will be able to keep up the payments. Imagine having to spend on something suddenly, e.g. a new central heating system; could you still afford the mortgage?
Start looking early
Start shopping around for your mortgage as early as possible. You can secure a deal as much as six months in advance; this should help sidestep any issues around your equity disappearing as house prices continue to fall.
Select a term you can afford
The longer the term, the more interest you will repay overall. So without overstretching yourself, select a term you can comfortably afford. Don’t go in at the top end of your budget because if something goes wrong it will be completely unaffordable and the banks wont look favourably on it.
Mortgage flexibility
You will want a mortgage that is as flexible as possible to suit your needs. Ask some practical questions such as: Does it offer overpayments? Does it offer a premium holiday in the event of a sticky time? If you move house can you move the mortgage to the new property without paying big penalties?
Get financial advice
Speak to an Independent Financial Advisor (IFA) or your bank. It is free advice and they will tell you what you can and can’t do. Ask both bodies for both – don’t just rely on one. Anyone giving you advice should run through a budget with you and make sure it is affordable.
Interest rates
Interest rates can be confusing but always remember that you are looking for a high rate for savings and a low rate for mortgages and other borrowing.
You need to bear in mind that if you are on a variable interest rate and interest rates rise in the general economy, the mortgage company will likely pass this increase onto you. This means that you could find your interest rate is increased and therefore your monthly repayments are too.
If your fixed rate comes to an end and you have to remortgage when interest rates are higher, then your repayments again could be higher.
Consider all the options
You need to consider the whole package being offered by the mortgage company and whether or not it’s the right one for you. Don’t just go for the cheapest monthly cost or the one that offers huge cash back.
Look at what other options the mortgage company offers, for example payment holiday or maybe allowing you to make overpayments.
Also if you are being offered a low interest rate for an introductory period, you need to ask the question, what happens after this period ends? Will I be tied in at a high interest rate for a long period of time?
Overpay, overpay, overpay!
By maintaining your payments you could save tens of thousands on interest over the term of the mortgage. However, you must check that you won’t suffer any penalty as a result of the overpaying.
Make a big deposit
Try and get together the biggest deposit you can afford. This has always been the case but never more so than now – the days of 100% and even 95% mortgages are gone.
It’s recommended you have at least 10%, but get more if you can as it will open up more options in today’s mortgage market.
Low rates: Don’t be fooled
Don’t just be drawn in just by a low rate. These days mortgage products can come with fees that amount to thousands of pounds. People with smaller mortgages may want to consider going for a deal with a higher interest rate and a lower fee as it could cost less overall.
Shop around
If you already have a mortgage, check what your existing lender will offer you but always shop around.
Mortgages: In it for the long haul
Bear in mind that a mortgage is in place for a long period of time and that your circumstances may change. So when working out how much you can afford to borrow, try and consider likely future events – it’s a bad idea to borrow the maximum you can afford and not be able to spend money on anything else.
When you get your mortgage, you don’t have to stick with the same lender for the whole term. You can transfer and take advantage of lower interest rates with other lenders.
Just be sure of terms and conditions before you sign on the dotted line, as some mortgages tie you to the lender for a fixed amount of time. Changing within this time may mean paying a fee.
Don’t suffer in silence
If your mortgage payments become difficult, get in touch with your mortgage lender at the earliest opportunity. It is always good to communicate with your lender as they may be able to offer a solution.
Save for Emergencies
And last but certainly not least, make sure you have an emergency fund in place incase something goes wrong.
