How To Find The Right Mortgage
Are you thinking about moving house or changing your mortgage deal? As everyone’s circumstances are different, it’s important to find the right mortgage for your situation. Although many homeowners can port their current deal over to their new home, the lender still has to provide an agreement (or decision) in principle. I’ve shared some guidance on choosing a suitable mortgage, including fixed rate, variable and tracker mortgages.
What Are The Different Types Of Mortgages?
There are various types of mortgages, and they differ in terms of interest rates, repayment methods, and the purpose. I have listed the three most common mortgages below, although there are others available, such as discount, capped and buy-to-let.
- Fixed-Rate
A fixed-rate mortgage has an interest rate that stays the same for a set time frame, such as 2, 5 or 10 years. Many people choose this type of mortgage as it offers payment certainty each month. However, if the interest rates go down, then you could end up paying more than a standard variable-rate mortgage. After the fixed-rate ends, lenders usually move people onto a variable-rate deal. - Standard Variable-Rate (SVR)
For a standard variable-rate mortgage, the lender sets the interest rate, which can change at any time. The lender’s rate is usually higher than the rates for either a fixed or tracker mortgage. Although not directly linked, this type of mortgage can be affected by the Bank of England’s base rate. - Tracker
A tracker mortgage is linked to the Bank of England’s base rate, plus a set percentage, which means that payments can rise or fall. After the term ends, this type of mortgage is also usually moved onto a standard variable-rate mortgage.
If you’re within six months of a fixed-term mortgage ending, then it could be worth switching your deal. Always get professional mortgage advice before changing your existing deal.
Do You Need an Agreement (Decision) in Principle?
Before a mortgage lender offers you a deal, they will check your affordability. Even if you already have a mortgage, the lender still needs to check that you can afford to buy your next home. In some instances, homeowners can port their existing mortgage over to a new property. However, you’ll still need to get a mortgage agreement (or decision) in principle.
Lenders look at a variety of factors before they will offer you a deal, including your credit score and payment history. Once you have a mortgage agreement in principle, you can make a viable offer on a property. Your mortgage offer is usually provisional with an expiry date (often 90 days). You will need to bear this time frame in mind if your offer on a property is accepted. For more information, see my blog Moving House: Guide to a Smooth Move.
Find a Mortgage Adviser – Ask Ann Evans
Whether you’re upsizing, downsizing or relocating, it’s important to choose the right mortgage for your needs. The mortgage process can be complicated, so it’s always wise to use a Mortgage Adviser to help you find a suitable deal and apply on your behalf.
If you need a mortgage, I’m here to help. With access to over 90 lenders, I will research the market to find the right mortgage for your needs. I’ll talk you through the different types of mortgages, including lender criteria, interest rates and repayments.
Thinking of moving house and need mortgage advice? Book a call today
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Sources:
https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/mortgage-types-explained-aIGHA3F2WqyQ
https://www.experian.com/blogs/ask-experian/what-do-mortgage-lenders-look-for/
https://www.moneysupermarket.com/mortgages/first-time-buyers/top-ten-tips/
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/
