How to choose the best mortgage

The two main things you need to factor in when looking for a mortgage are how much it costs, and whether you and your property are eligible.

You’ll need to look at the loan to value you require (the size of the mortgage you need as a percentage of the property’s value), whether it’s for first time buyers, existing owners for a new home, or a remortgage, then check out the fees involved, the monthly cost in the initial period, and the cost thereafter.

There’s quite a lot involved so a qualified adviser can do a lot the hard work for you.

What are your mortgage options?

• Repayment Mortgages: This is where your monthly payment gradually pays down the amount of money you owe.
• Interest Only Mortgages: This is where your monthly payment only pays the interest on the capital. You’ll need to save separately to pay the capital at the end of the term. Interest Only mortgages typically involve a lower monthly payment but can cost more in the long run.
• Fixed Rate Mortgages: Here, the interest rate is set at the start and stays the same until the fixed term ends. This term is always defined when you take out your mortgage, and is usually 2, 3, or 5 years.
• Variable Rate Mortgages: With Variable Rate mortgages, the rate is often lower at the outset than with a Fixed Rate mortgage but it could go up or down if certain things (like Bank of England Base Rate) change.
• Using an advisor or not: Many people choose to use an advisor to help them get the best deal. Some advisors are able to choose mortgages from the whole of the UK market, and some are able to select them from a segment of the market. It’s important to know what type of advisor you are using before you proceed.