There are very few individuals that can buy a property outright. That privilege resides with an extremely small number of the UK population, with the majority of us having to get some sort of mortgage loan to acquire a house.
Getting a mortgage in itself can almost be more of a struggle than getting a house. These days with so many different types of loans to choose from, it can become quite confusing for the potential buyer.
A mortgage is essentially a loan secured against the house that you are buying. You cannot sell your house without first paying off the mortgage as well. So any profit from selling would be deducted by parts of the mortgage that you haven’t paid off yet.
Generally, mortgage loans are given to people who put in a deposit of around 15%, but this does vary. The company would then pay the rest and you would strike a deal with the company about the repayment terms.
Different Types Of Mortgages
Two of the main types of mortgages are fixed rates and variable rates. Fixed rates are the most common at this moment, and are like they sound, fixed terms of interest on the mortgage for a set period. The benefit to this is knowing exactly what you owe, but if interest rates lower you won’t profit.
Variable rates are the alternative to this with the rate of interest being guided by the Bank of England’s base rate, which the banks generally keep in line with. The downside to this is rates could rocket and you could end up paying more than you could have on a fixed rate.
Analyse Your Own Needs
It is important that you get a mortgage lender in place before you find a house. This way when you find the property that you want you will be in an excellent negotiating position, rather than being caught on your heels without a lender. Your circumstances as an individual or as a collective will dictate which type of mortgage will suit you. House Network offer a range of the most common fixed and variable rates.
A fixed rate would be good for someone wants to know every month what they are going to pay. This may suit a person that has a restricted amount of income, so a certainty of funds is important. Alternatively, a variable rate may well benefit someone who is in it for the long-term, with the overall rate possible to give you a saving in the long-run.