Owning their own home is a goal for many people. This not only means that they will have accommodation that really feels like theirs but it often makes a lot more sense financially. Paying rent on a house can work out very expensive over a long period and at the end you are left with nothing. Many people also view purchasing a property as a good investment. The vast majority of us will not have enough money to pay for a house out of our own savings so we will need to borrow the money to this; the most popular way of doing this is by getting a mortgage.
What is a Mortgage?
Simply put, a mortgage is a type of loan that is given for those wishing to buy property. It is possible to get a mortgage from a number of different types of lenders including: banks, building societies, and specialist mortgage agencies. In the UK the Financial Service Authority (FSA – http://www.fsa.gov.uk/) is responsible for overseeing most of those institutions that provide mortgages.
When it comes to repayment there are here are two main types of mortgage: repayment and interest only (http://www.direct.gov.uk/en/index.htm). With the repayment mortgage you will be expected to give money back the lender each month which will cover interest and pay off some of the money owed. An interest only mortgage means that you only need to pay the interest owed each month. This of course will mean that you won’t actually be reducing the amount you owe. To remedy you will also have a payback plan. The benefit of having an interest only mortgage is that it gives you a bit of wiggle room if you are going through a bad patch financially.
How to Choose the Best Mortgage
If you want to get the best mortgage then you will need to shop around. Of course a lot will depend on your circumstances and some people may have very few options when it comes to mortgages. In order for you to be effective in your hunt for a mortgage it is vital that you know what you want and what you can afford to pay back. Some mortgage providers will advise you on what is the best option to suit your circumstances but it helps if you already have an idea before you arrive at their door.
When you receive information from any mortgage provider it is important that you establish if they are advising you or just providing you with information. This might not seem so important but it can have huge implications later. If any mortgage provider provides you with poor advice then you may later be able to take legal action; if they are only providing you with information though you will have less of ability to complain. The decision of whether to be advised or given information is often left to you. If you choose to be advised then the mortgage provider will look at your circumstances and hopefully help you find the best possible deal.