The Best Advice on Mortgages I’ve found

How to Get the Best Mortgage Rate by Knowing Your Sums The days of banks scrambling to give you a mortgage are historical. However, you can improve your chances of taking advantage of available home loans by getting yourself a mortgage makeover, beginning with knowing your sums. Indeed, if you want no less than the … Continue reading “The Best Advice on Mortgages I’ve found”

How to Get the Best Mortgage Rate by Knowing Your Sums The days of banks scrambling to give you a mortgage are historical. However, you can improve your chances of taking advantage of available home loans by getting yourself a mortgage makeover, beginning with knowing your sums. Indeed, if you want no less than the best deal around, you have to know the exact amount you need to borrow, how much your home is worth, and what percentage the mortgage is of your property’s value – known as loan-to-value. You can estimate your home’s value by studying similar properties for sale, remembering to deduct a reasonable discount, and using an online home price calculator. The best mortgages go to those with bigger deposits of at least 40 per cent, but don’t worry – if you cannot afford this, lenders can offer alternative deals to those who want to borrow 75 per cent or less. Above 75 percent is trickier to get a nice rate, but it’s still not impossible to find a mortgage. Note that higher loan-to-values make mortgages more expensive.
Understanding Mortgages
The rate is also influenced by the length of the deal. Contracts that run for five years are more expensive than those that expire in two years. Mortgage rates are hinged on a whole range of interlinked factors; your central bank’s base rate and its expected path; how much a bank or building society must pay savers to get their cash and lend the money out as mortgages; and money market funding costs. You need to weigh up all these factors when selecting a mortgage.
Figuring Out Mortgages
You also need to decide whether or not you need the security of a fixed rate, which is recommended if you think you would struggle if there was an increase in monthly payments, or you are ready to risk a tracker and pay a bigger amount in case the base rate goes up. Then again, it is not only the rate you have to consider. Lenders also gain profit from fees mortgages come with. These can be much, making what looks like a cheaper mortgage turn out to be more expensive; hence, make sure to add this to your loan’s total cost when comparing mortgages. Remember, the deal with the cheapest rate is not automatically the best mortgage. With super-fee mortgages – cheap rates offered in exchange for larger arrangement fees – a smaller loan can have you ending up out of pocket by going for a discount rate. The general rule is, bigger mortgage equals better high fee/low rate deal, but still, you need to be aware of percentage-of-loan fees, which are higher for bigger loans. Finally, watch out for charges to be collected after the mortgage, including early repayment charges, exit fees and more, along with costs for property valuation and the legal purchase process. All of these can mount up, but there are some deals that can work out for you if you just ask your lender for options.

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