Homeownership is something that many people aspire to, and buying a home is the biggest single purchase most individuals will ever make. The mortgage period can be daunting for first-time buyers because it’s hard to predict what life will be like in three or four years, and your financial position may not be as secure as it is today.
There are several things you need to think of when choosing a home mortgage. Picking a suitable loan can be difficult and all-consuming, but by doing your homework, you should be able to find a package that is both affordable and beneficial for you.
When you have decided on a potential property, research the various mortgages available to have a good idea of the right type for your situation. The search process can be simpler if you have a clear picture of what is offered before going through an endless list of lenders online.
It is important to speak with people in the know about mortgages, such as independent financial advisers and accountants. They will be able to help you through the minefield of options available to make an informed decision about the type of property finance to best suit your needs. The following factors are key considerations when looking for the best home mortgage deals:
· Length of the loan: the length of a home loan is an important consideration because it directly affects how much you can borrow and what monthly payments will be required. For example, if you decide to take out a standard 30-year loan, monthly payments will be less if the interest rate is lower. However, if rates rise significantly during the term of your loan, so too do your monthly repayments – and it may become more difficult to keep up with them. On the other hand, if you opt for a 15- to 20-year loan, it should be cheaper each month and easier to pay off. But if rates increase considerably, you may find yourself struggling to meet repayments.
· Interest rate and fees charged: interest rates can be fixed, or variable and either one looks attractive on the surface. Fixed rates mean that monthly repayments will not change, but variable interest rates can be more attractive because they are generally lower than fixed ones. However, you may also have to pay commitment fees to borrow money for a shorter period, so it’s important to check carefully before locking yourself into any financial commitment.
· Fixed or variable interest rates: fixed-rate loans are essential mortgage solutions for first-time borrowers because they ensure steady repayments. However, if you’re confident your income will be strong in three to five years and you’re willing to risk increases to interest rates – then a variable rate deal might be suitable.
· Payment types: repayment loans are the most straightforward, but you must check that your monthly income is sufficient to meet repayments. Interest-only loans mean you pay back only the interest charged on the loan amount each month, so it’s cheaper in the short term because there is no capital repayment. But this will increase the total interest you pay in the long term.
When considering all aspects, it becomes apparent that the best home mortgages provide for low-interest rates with low closing costs. Additionally, the home mortgage should not carry an extensive number of fees or hidden charges that can inflate the cost of your monthly payments.