Why It’s Important to Get The Right Type of Mortgage

When you finally find the home which your heart settles on, it’s easy to throw everything up in the air and do whatever it takes to get it. Whilst you wouldn’t be the first and certainly not the last to do so, it’s vital that you check out your financial options carefully, before making any move. Sometimes ‘head over heart’ isn’t the way to go.

When buying a home, you should have three aims at first:

• Save for a down payment
• Find the ideal home
• Secure a mortgage

Many people think that the third option is the easiest, but it’s actually one of the most time consuming parts of the whole process.

A Difficult Decision

A home is an investment, but your mortgage is the price you have to pay in order to reach the full investment stage. This is payment you need to give back to your mortgage lender every month, without fail. The better deal you can get at the beginning, the easier it will be throughout the entire lending period, which can be up to, or even over, 10 years in some cases.

There are various different types of mortgages, but as a first time buyer, you’re probably going to be offered a fixed rate mortgage. This type of mortgage gives you a fixed repayment amount every month, which never changes, even if the interest rate skyrockets or plummets. Of course, you miss out if interest rates become favourable, but you also benefit if they go the other way.

A fixed rate mortgage allows you to budget and put into place a contingency plan, should anything happen to your job, tiding you over until you find new employment.

Of course, there are other types of mortgages too, in fact many, including variable rate mortgages, which change depending upon the interest rates, and therefore your repayment amount also changes. This can go either way in terms of positive or negative, and has a little more risk attached to it.

Regardless of the type of mortgage, it’s important to know that you will be offered far better rates and conditions if you have a good credit record and score, and if you have at least 20% down payment saved up, which needs to be in your account for at least 60 days untouched. A better interest rate attached to your mortgage means lower repayments for you throughout the term, and that also means that you will have spare cash at the end of every month, rather than scrimping and saving.

Always Head Over Heart

Throughout all of this, it is vital that you don’t allow your heart to take over your head and make decisions which have no sensible financial basis attached to them. Take advice wherever it is given, and weigh up the pros and cons of every decision you make.

If you need any advice on any aspect of buying, mortgages, or down payment matters, don’t hesitate to call Ramahi Real Estate Group.