Your Mortgage - What To Choose
There are a few things to think about when deciding on a mortgage. Following is a rundown of the most important points to consider.
Fixed or Variable Interest Rate?
If you choose a fixed rate mortgage, the interest rate and your monthly amount due will not change for the duration of the fix. A variable rate mortgage, however, will fluctuate along with the bank's interest rate charges. There are different kinds of variable rate mortgages on offer, namely standard variable rate mortgages, which charge the normal lender rate when there are no special deals available, and discount variable rate mortgages, which can offer a lower rate than the lender's standard rate.
Generally, if you feel that future interest rates will rise, it is probably better to get a fixed rate loan. However this type of mortgage will likely cost more if rates are being tipped to go up. If you expect interest rates to fall, a variable rate loan will more likely be the better option.
Repayment or Interest Only Mortgage?
A repayment mortgage is the only way to ensure that your mortgage is paid off at the end of the term. This also allows you to see the amount owed shrink each month. Interest only mortgages are offset by investments, which are supposed to pay off the outstanding debt at the end of the term. However, as they depend on stock market movement, no guarantees are offered that enough will be made to cover the remainder of your loan.
Offset or Current Account Mortgage?
Offset mortgages allow you to offset your savings against the amount owed on your mortgage. This means that you will not earn interest on the money in your account, but instead will reduce the interest on your mortgage. Combining your mortgage with your bank accounts is a good idea, as long as you are disciplined in controlling your spending. This mortgage can save a lot of interest over a period of time, however it can be easy to borrow as quickly as you make repayments, which means that your balance will not lower.
Comparison Site or Mortgage Broker?
Comparison sites have become very popular nowadays, and can be a good way of assessing the different kinds of mortgages available. However, a broker can guide you in the right direction towards the best lender for your current situation. Always check the broker's charges before going ahead with this situation.
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