Choosing a mortgage

Choosing a mortgage may seem daunting. But with the right mortgage advice, your choice can be well-informed and appropriate for your needs.

Your Independent Financial Adviser (IFA) will go through the recommended products with you in detail. However, you may wish to pay attention to the following
issues when you are listening to their explanation:

  • term;
  • interest rate;
  • interest-only or repayment?
  • how much can you borrow?
  • flexibility; and
  • whether there is an early repayment charge.

The term of the mortgage
If you have a repayment mortgage, the term means the length of time it may take to pay-off the loan. A typical term may be 25 years, although slightly longer and shorter terms may be available.

Choosing a mortgage term is a personal issue, and the choices available to you may depend on your age. Shorter terms may mean that you make higher monthly payments but that less interest will be paid overall. Longer terms on the other hand may mean lower monthly payments, but given that the loan will be outstanding for longer, it will result in more interest being paid.

Interest rates
Do you want a Fixed rate for certainty, or would you prefer a Variable product so that you can take the risk of the rates going up or down. This choice may depend on your attitudes to risk and to personal finances.

Interest-only or Repayment?
Repayment mortgages mean paying off the interest and ‘chipping away’ at the outstanding capital as you go along. Interest-only mortgages on the other hand mean paying the interest as it falls due, but making your own arrangements about how you would repay the capital.

How much can you borrow?
Choosing a mortgage may involve exercising some restraint. The question you and your Mortgage Adviser should really be asking is, not just how much will Lenders offer me, but how much can I comfortably afford? The available amount may be based on your circumstances and your loan to value ratio. How much you can afford may depend on your personal circumstances.

Flexibility and early repayments
Choosing a mortgage for your next house purchase may be difficult enough, but choosing a home loan for the next 25 years of your life might be even harder. With mortgage advice from Shire Financial Management, we can help you choose a product that will fit your plans now and for the future.

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