For the uninitiated, mortgages, and the house buying process as a whole, can seem seriously confusing but the reality is that it’s simply a process, with various steps, like any other.
You simply need to work through the steps, asking important questions throughout, to ensure you get the best mortgage suited to your needs.
We’ve listed some of the most important considerations below.
There are a number of steps you’ll have to progress through before choosing a mortgage. These steps are simply part of the house-buying process and include:
House Buying Schemes
There are various house buying schemes available for different situations including Help to Buy ISAs, Right to Buy schemes for council houses and co-ownership options.
We would recommend checking out The Money Advice Service government resource here. It details every available scheme and should give you a clear picture of the options available for your particular deal.
Saving a Deposit
Saving a deposit is absolutely crucial to the house buying process and it’s highly recommended that you begin saving as soon as possible, months or even years before you make your purchase.
This is primarily because mortgage lenders expect a deposit of at least 5% of the house value. However, the best deals start at 10%, 15%, 20% and beyond so the bigger your deposit, the better the mortgage deal.
Establishing Borrow Limits
No matter what size of a deposit you have, a mortgage lender will want a clear and concise picture of your financial situation before signing off on any particular type of agreement.
This will include details on your salary or wage, monthly outgoings and credit score.
For an accurate affordability calculation contact our independent financial advisor, William Fullerton of Mark Crawford Financial. For a quick indication you could also check out Money Supermarket’s mortgage calculator here.
Please note that online calculators may not take into account all of your circumstances and may not be 100% accurate.
Pick a Home
Have you decided on an apartment or bungalow? Detached or semi-detached? New build or resale? The entire process is filled with questions and answers but at the end of it, you’ll have a hand-picked home to call your own.
Below we’ve listed some of the most common mortgage deals available.
Fixed Rate Mortgage
Fixed rate mortgages simply mean that you agree on a “fixed interest rate” on your mortgage with the lender over a specified period of time. Fixed rate agreements generally last anywhere between 1 and 5 years but in some cases can last up to 10 years.
The benefit with this type of mortgage is that you can carefully plan and budget around your monthly mortgage repayments as they will remain the same throughout the agreed timeframe. The only major downside is that even if interests rates go down, your agreement will remain the same.
A tracker mortgage is simply one form of a variable rate mortgage. Unlike the fixed rate option above, a variable rate mortgage is subject to change and fluctuation.
Your mortgage repayments will be linked to the Bank of England base interest rate and these lender agreements generally last between 2 and 5 years in total.
They are less reliable that fixed rate options, and less suitable for those on a strict budget, but can be cheaper.
Discount mortgages are also variable rate mortgages but unlike tracker options aren’t linked to official Bank of England interest rates.
They generally last between 1 to 5 years at a time and can be competitively priced but are also highly dependent on lender demands.
If you’re still feeling lost, don’t worry. This is simply a quick overview to lay out the most common options available and we always recommend that you speak to experienced professionals who are comfortable in choosing the best option relative to buyer needs.
If you’re reading this in Northern Ireland we’d be happy to advise you on the best mortgage product available. We’re based in Glengormley, Newtownabbey, have a wealth of experience, and cover a large section of County Antrim.
Say hello! We’re happy to help.