Do you need help with your mortgage plan? You need not worry because I’ve got some good tips for you on how to go about making the best mortgage plans. First things first, let’s have a look at what a mortgage is.
What Is A Mortgage?
A mortgage is a loan that enables you to cover the cost of a home. It is more like a long term debt which you can pay back gradually over a long period of time, while enjoying its benefits – it could take years or decades to pay back that is why it is important that you choose right.
How Do I Start Out?
You can start by finding the right mortgage that suits you. There are several mortgage deals clamouring for your attention out there and you might be confused about which one to stick with. To avoid choosing wrongly, it would do you well to do some research and talk to experts such as mortgage brokers to assist you in finding the mortgage that is right for you.
What Are Some Types Of Mortgages?
Basically, mortgages fall into two main categories, namely:
- Fixed rate mortgages
- Variable rate mortgages
In a fixed rate mortgage, the interest you pay remains constant for a stipulated period of time while the interest you are charged on a variable rate mortgage varies, as the name implies.
Here are some examples of variable rate mortgages:
- Tracker mortgage: Tracker mortgage is known for its relatively short lifespan and the interest rate usually moves in line with the Bank of England’s base rate.
- Discount mortgage: With a typically two to three years lifespan, discount mortgage applies to a particular time frame. It is a discount off the lender’s standard variable rate.
- Offset mortgage: Here, you will have to link your current and savings account to your mortgage so that interest is paid on the difference.
- Standard variable rate mortgage: This is the normal interest rate that your mortgage lender charges homebuyers. It has the same lifespan as your mortgage. Changes in interest rate depend on the base rate set by the Bank of England.
I hope that with the above, you are better able to decide on the right mortgage for you. Share your experience in the comments section below.