If You Read One Article About Homes, Read This One

Knowing Your Sums – The Key to the Best Mortgage Rate The days of banks scrambling to give you a mortgage are historical. Still, you can increase their chances of taking advantage of available home loans by getting a mortgage makeover, starting with knowing your sums. True enough, if you want to get a good … Continue reading “If You Read One Article About Homes, Read This One”

Knowing Your Sums – The Key to the Best Mortgage Rate The days of banks scrambling to give you a mortgage are historical. Still, you can increase their chances of taking advantage of available home loans by getting a mortgage makeover, starting with knowing your sums. True enough, if you want to get a good deal, you should know how much specifically you have to borrow, your home’s worth, and the mortgage percentage of your property’s value, otherwise known as loan-to-value. You can figure out your home’s value by looking into similar properties for sale, noting you need to remove a fair discount, and making use of an online property price calculator. The best mortgages are given to those making larger deposits of 40 per cent at minimum, but don’t fret – if this is too much for you, lenders can offer options to those who would like to borrow 75 percent or below. Over 75 percent gets trickier to get a good deal, but it remains possible to find a mortgage. Take note, the higher your loan-to-value, the pricier mortgages will be.
Figuring Out Mortgages
The length of the deal also has an impact on the rate. Two-year deals are cheaper than five-year contracts. Mortgage rates are based on an entire range of interrelated issues; the base rate of your central bank and its projected path; the amount a bank or building society should pay savers to attract their money and lend this out as mortgages; and finally, funding costs on money markets. You need to weigh up all these factors when selecting a mortgage.
The Art of Mastering Resources
You should also decide if you want the security of a fixed rate, which is advisable if you think you would be struggling if the monthly payments increased, or are willing to risk a tracker and paying a higher amount if the base rate shoots up. Then again, the rate is not all you have to consider. Lenders also earn from the fees they collect from mortgages. These can be a lot, making a seemingly cheaper mortgage turn out more expensive, so it’s a must that this is added this to your loan’s overall cost as you compare mortgages. Remember, the best mortgage is not always the deal that has the cheapest rate. 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. As a rule of thumb, bigger mortgages equal high fee/low rate deals, but be careful with percentage-of-loan fees, which are higher-priced than 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. These can all mount up, but there are always alternative deals that may work out for you if you only just ask your lender for a few options.

Leave a Reply

Your email address will not be published. Required fields are marked *