Choosing or determining the mortgage to apply for depends on your financila status, your time, and distance or location you are trying to get the house. And sometimes your taste or favouring of some heard about or beneficial mortgages might determine how to choose and apply a mortgage.
These are two major methods of conditions of mortgages to apply below:
Interest-only mortgage
Capital and interest mortgage
The interest-only mortgage option
Is the one with an Interest-only mortgage, the monthly payment includes
only this element of the debt.
The upside of this is that the monthly cost is considerably lower than
for a comparable repayment mortgage.
The downside is that at the end of the mortgage term you still owe the
original amount you borrowed.
And if you can’t repay it, your mortgage lender is perfectly entitled
to repossess your home.
that’s why, if you go for this option, you need to organise a way to
repay the capital debt.
Unless you can be certain of a sizeable inheritance or other windfall,
this means saving as you go along. There are notification to check
below before opting for one:
It is essential for you to discuss your options with a financial
adviser who specialises in investment before making your choice.
Whatever repayment mortgage housing type you go for, it involves making
a substantial, long-term financial commitment.
For example Opting for an interest-only mortgage involves accepting a
significant degree of risk.
Capital and interest mortgage
So it is preferable choosing a Capital and interest mortgage instead.
This is because The Capital and interest mortgage option is With a
repayment mortgage, the monthly payments are made up of interest and a
portion of the capital debt.
This means that, provided you keep them up to the end of the mortgage
term, you are guaranteed to clear what you owe
One important thing is that the majority of mortgage providers no
longer ask for proof that you have set up a suitable savings or
investment plan before agreeing to an interest-only mortgage.
But don’t let this tempt you into going without one if you don’t have
enough money put aside when the time comes to repay your lender, you
could lose your home.
Furthermore there are some things to consider through you.
If you are buying:
As a first time buyer, you are likely to have some particular
requirements.
You will probably have a very small deposit or possibly no deposit at
all. You may be having to push your budget to the limit just to afford
a mortgage, but are determined to get a foot on the property ladder.
There are several suitable solutions for you:
100% mortgages many lenders offer 100% mortgages aimed at first time
buyers. These are normally repayment mortgages and can be a good option
to get you started.
If you have a deposit, but can’t afford large monthly payments, an
option to consider might be an interest-only mortgage, where your
monthly payments only consist of interest, and you don’t make any
payment towards the capital sum.
Choose a mortgage term longer than 25 years it may seem daunting but
many lenders will offer mortgages with terms up to 40 years
Any of these choices can be a good way to get started in home
ownership, with a view to moving to a better deal in 2-5 years time
when you have some equity in your property and are perhaps able to
afford larger monthly payments.
You can determine like this if you are a low Salary earner
If you are then you might find it difficult to get a repayment mortgage
that meets your requirements. This is because bonuses and overtime are
hard to predict, not guaranteed and are normally excluded from your
assessed income by mortgage lenders. This means you could end up being
offered a much smaller mortgage than you think you can afford.
The best advice is to apply for a flexible mortgage.
A relative of the interest-only mortgage, flexible mortgages have
monthly payments which are interest-only, but allow you to make ad-hoc
repayments towards reducing the capital sum .
For example, if you get a quarterly bonus, every 3 months you could
make a payment towards reducing the capital sum of your mortgage,
whilst paying smaller, interest-only payments each month [from your
salary].
Flexible mortgages like these can be helpful for anyone with an
unevenly distributed income who receives occasional large payments,
rather than solely receiving salaried income.
Specifically I will like to give this that there is also one and most reliable mortgages to apply for:
The Fixed Rate Mortgages.
It is an older form of mortgages, which I am sure older have applied
for. The major advantage of fixed rate mortgages is that they present
predictable housing costs for the life of the loan. Some of the fixed
rate mortgages might be:
40-Year Fixed Rate Mortgages,
15-year Fixed Rate Mortgages,
Two-weeks Mortgages,
Changeable Mortgages.
All depending on their strict conditions. It depends on you to choose
what favours you.