Assuming
that you cannot sensibly do such a huge amount of work, there are, however, two
things that you should do in the lead up to getting a mortgage and knowing how to compare mortgages.
The first is to do some homework and compare mortgages. With the internet, this
is feasible and there is help at hand. The second thing to do is to get
yourself a mortgage advisor. These professionals have access to an even wider
range of products than you can find on the internet, and they will have tools
to help you make a decision as to which is the best mortgage to suit your own
personal circumstances.
Before you go online to compare mortgages you should understand the different types
of mortgage available to consumers. There are basically two types: the first is
a repayment mortgage – also known as a capital and interest mortgage – and the
second is an interest only mortgage.
A repayment mortgage is one where your monthly repayments consist partly of the
interest on the loan and partly of repayment of the capital borrowed. Monthly
repayments are calculated to be the same every month over the term of the
mortgage, but in fact there is more interest paid at the start of the term and
less capital, and the ratio changes as the term goes on, so that by the end
you’re repaying mostly capital and hardly any interest. At the end of the term
of the mortgage you will own your home with nothing left to pay.
With an interest only mortgage, each monthly mortgage repayment is solely
interest. None of the monthly repayment goes towards paying off the capital
loan, which means that at the end of the term the amount of the original loan
still has to be repaid. In order to do this, borrowers have to take out an
alternative savings scheme so that they can pay off the loan. Such savings vehicles
can be endowment policies (very popular in the 1980s and 1990s, but largely
discredited in recent years), ISAs or a pension plan. Problems occur with
interest only mortgages if borrowers do not maintain their savings plan, and
indeed problems have occurred and continue to do so with endowment policies
that will not accrue enough interest to pay off the capital loan amount. Fixed Rate Mortgage
monthly endowment payments are designed to make enough money to pay off the
mortgage, but they have been much maligned because of poor investment growth
rates achieved in a low inflationary environment.
The ability to know Champaign Car Insurance online can give you a great head
start in understanding what your mortgage will cost you. Many websites will ask
you for financial data concerning your lifestyle (though taking no personal
details to link the figures with you) and indicate what repayments you might be
able to afford, and therefore what mortgage amount you might be able to borrow.
Mortgage comparison websites will also give you a list of the top mortgages
available, and the fees involved, but it is always best to do your own
research, and then go to an independent mortgage advisor who will give you more
assistance in getting the right mortgage for you