Getting the right mortgage

Posted by Nick Niesen on October 29th, 2010

Selecting a mortgage can be a difficult task. First of all, you need to decide which mortgage would suit your needs best.

For those who want to know what their monthly outgoings are going to be, should look at a fixed rate mortgage, as these are mortgages that are set at a fixed price for a certain period, which can be anything from 1 year to 5 years.

A variable mortgage is just that, it?s a mortgage rate that changes (or varies) with the base rate. So if the base lending rate increases so does your mortgage rate, however the positive aspect of this type of mortgage is that if the lending rate lowers so does your mortgage repayment. This is not for all ? as there is an element of risk involved (this was true back in the late 1980?s, when unfortunately rates rocketed as house prices tumbled)

You may also need to think about a repayment mortgage or an interest only mortgage.

The difference is that the latter does just that, it only pays the interests, so whilst your monthly payments will be less, you will still have the capital to settle at the end of the mortgage duration. However a repayment mortgage will be a little more expensive, but at least you will be paying off both the capital and the interest, which means ultimately your mortgage is reducing.

When you have agreed which type of mortgage suits your lifestyle then don?t be afraid to shop around whilst you are still tied to a contract ? as there is usually a set time when you have the ability to negotiate another rate and/or go to another lender who is offering you something cheaper.

I would always suggest that in today?s competitive market that you shop around, as there are lots of different lenders with differing rates, and you need to find the right one to suit your budget and lifestyle.