mortgage guide

Mortgages

an introduction from the frog

For most people a mortgage is the biggest financial commitment they will ever enter in to. Seeing as this is the case it makes huge sense to give very careful thought to the type of mortgage you take out. Making the wrong decision could cost you thousands when calculated over the life of the mortgage. In addition making the wrong choice now make see you switching your loan in a couple of years and facing stiff penalties in the form of redemption penalties.

For many with little or no experience of mortgages the huge amount of products on offer will be mind boggling. However with a little research and reading you can soon gain an understanding of the basic products on offer, learn to recognize their pros and cons. By taking your time to research the market and products you could save thousands and a whole lot of hassle.

Affordability

don't over stretch yourself

The main factor to consider when working out how big a mortgage you can get is affordability. Traditionally mortgage companies would only lend you up to 2.5 times your salary. However over recent years lenders have relaxed their lending criteria and many will now offer you much greater sums. However you should not over stretch yourself. The first step you should take is to sit down and work out your monthly outgoings and what sort of monthly repayments you can afford.

Once you know what you can comforatble afford to repay each month you should run a few what if scenarios to ensure that if circumstances around you change, you will still be able to keep up your repayments. For example consider the implications on your monthly budget if interest rates iincreased to 10% or 15%. What would happen if you lost your job or were unable to work due to an illness or accident. For the latter two you may want to consider obtaining extra insurance to cover such eventualities - this will further reduce your monthly budget.

What type of mortgage do I need?

understand the options available to you

Before putting an offer on the house of your dreams, you should first decide what type of mortgage will be best for you. Once you have worked out your affordability you may already have clues as to the type of mortgage you need. If you are self employed or a large portion of your pay is bonus related as opposed to salary you may find it hard to obtain a sizable regular mortgage. If this is the case a self certified mortgage will be the most appropriate. If you are aiming to rent out the property then a buy to let mortgage will be essential. There are many other types available which may or may not be suitable depending on both the size of your deposit and your view on the future movements of interest rates.

Research your way to the best mortgage deal

know the market

Finance Frog aims to simplify the jargon of the mortgage market and introduce some of the key concepts to you in order to allow you to make an informed decision when it comes to applying for a mortgage. You should not simply call a broker and take the first deal he or she offers. As with any investment, be sure to extensively research the market before making any decision.

Your first port of call should be to research the different types of mortgage on offer by clicking the links at the top of this page. Once you are familiar with the types of products available and are able to see through some of the jargon then you are ready to compare the offers from different mortgage providers and pick the best deal for you. Once you have done that try our free mortgage calculator to see how much your repayments might be each month.