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Looking at mortgage options as early as possible or better still, getting a mortgage offer in principle will save you time when you find your ideal home.
OBTAINING A MORTGAGE
Some choose to find their own mortgage and scour the market for the best products around, others may employ a financial advisor who will search for the deals that suit an individual's needs and charge a fee for the service.
Lanes have an independent financial advisor who will be able to take all of the stress away from the financial side of buying a new home.
REPAYMENT OR INTEREST-ONLY MORTGAGE?
There are two basic types of mortgage: repayment and interest only. You simply have to decide whether you want to start repaying your mortgage now, plus the interest charged on it, or whether you just want to just pay off the interest every month and repay the mortgage at a later date. If you choose interest only, the lender will want you to set up a saving plan to provide a lump sum that can be used to repay the debt, such as an individual savings account (ISA) or an endowment pension plan.
If you start repaying your mortgage straight away, you will clear the debt much sooner.
INTEREST RATE TERMS
You also need to decide what kind of interest rate you want with your mortgage. There are a few to choose from:
With a fixed-rate mortgage, the interest rate stays the same so you have the security of knowing exactly how much you will be paying every month for a fixed number of years. So, even if interest rates go up, your repayments won't.
STANDARD VARIABLE RATE
At the end of any agreement with your lender, your mortgage will switch to a standard variable rate. This means your mortgage payments will go up and down in line with the Bank of England's base rate.
This works in a similar way to the standard variable rate, but follows the Bank of England's base rate. The tracker rate will be more than the Bank of England's rate, but lower than the lender's fixed rate.
A capped-rate mortgage means you won't pay above an agreed rate for a fixed number of years. If the base rate falls, the interest rate on your mortgage will also fall accordingly.
The interest rate charged is lower with a discounted rate than other standard mortgages, for a fixed period of time.
Simply put, you can offset your mortgage against your current account, your savings account, or both. This way you only pay interest on the remaining sum. However, this means you won't earn any interest on your current and savings accounts for the length of the agreement.
Note! Your home may be repossessed if you do not keep up repayments on your mortgage