Not yet registered? Create a OverBlog!

Create my blog

Which mortgage deal is right for you?

It can be difficult to decide which loan is most appropriate for your circumstances, but understanding the pros and cons of different mortgage types makes the decision process a lot easier. Much depends on the global economy and which direction you see interest rates moving during the period for which you're tied in to the loan.

Types of mortgage

Best tracker mortgage A base rate tracker loan mirrors the movement in the Bank of England base rate. You won't be offered the same rate, but subject to a margin, you'll pay the prevailing rate at that time. Standard Variable Rate (SVR) This is the type of loan that you'll have when an existing agreement has concluded. It works in a similar way to a tracker loan, but the lender's margin is higher. You're free to negotiate new mortgage deals. Fixed rate mortgage You'll pay a pre-determined rate of interest on your loan for a defined period of time. The longer the period the APR is set, the harder it is for the bank to determine the prevailing interest rate. Interest-only mortgages A low APR mortgage where you make a separate arrangement to repay the principal. It is often used by property investors and home-owners, seeking to reduce their repayments during a period of financial hardship. Discounted mortgage You'll pay a slightly lower APR for a set percentage of the agreement. This is beneficial for new professionals who are likely to experience substantial income growth over the next few years. Cash-back mortgages Useful for first-time buyers, you'll be given a cash lump sum when you take out a loan with a lender. You'll normally pay a higher APR, but it's useful if you're planning home improvements.

How to choose a mortgage deal

Economic growth If the economy is heading into a recession, you're likely to be favoured by a tracker deal. This is because bank base rates are likely to fall. However, if the economy is showing signs of over-heating, a fixed-rate loan will keep the repayments stable. It isn't easy, but you need to assess the direction of the economy. Personal finances If you're trying to get by on a fixed income and are likely to find it difficult to get by if interest rates suddenly shot up, you're likely to be suited by a fixed-rate loan. This will give you repayment certainty, so you'll always know how much money you need to find at the end of the month.

Same category articles Banking

A guide to government business loans in the UK

A guide to government business loans in the UK

Starting up a company requires a lot of capital and this explains why there are many businesses applying for government business loans in the UK. Lenders, on the other hand, are very strict when selecting businesses which are eligible for these loans. When businesses apply for loans, the UK government or rather the Business Enterprise and Regulatory Reform department, acts as the guarantor for 75% of the loan in the event where the borrower fails to repay the loan.
How to find loans for a bad credit rating

How to find loans for a bad credit rating

Applying for a loan with a bad credit rating is possible although many people think it is impossible. There are however many lending institutions which provide different forms of loans to people with bad credit ratings.
Business bank accounts: What to look for

Business bank accounts: What to look for

If you have just started a business, then getting your business bank account sorted out should be the top priority on your to-do -list. Business banking in the UK is a well-structured, informed, yet complex area, and there are both things that you should look for in an account and things that you should avoid. This article looks at some great business bank account features, and indicates some things to look out for.
Where to perform an electricity price comparison

Where to perform an electricity price comparison

Companies continually raise the price of electricity, which means comparing the prices on a regular basis. Electricity comparison is beneficial to help to save money on a regular basis, and this is something worth doing every 30 days, which is how often you can change supplier. Here are a few places to go to find the cheapest electricity provider.