How to Shop for a Mortgage in 6 Steps

For a fixed loan, this payment will stay the same throughout the life of the loan. When we took into account upfront costs and interest, both options cost the same at the 9 year 2 month mark. If you plan to own your home less than 9 years 2 months, Option B is a better choice. Having an interest-only mortgage means your payments will be lower than a repayment mortgage. But if you’re looking at interest-only, make sure you know the financial implications.

So you own 40% of the home, and £80,000 can be used as equity. The mortgage ‘term’ is the period you choose to hold or repay the mortgage over. It can be anything from 5 to 40 years, depending on the lender. Usually, you’ll need a minimum of 10% of the property’s value to get a mortgage, although it’s possible to put down a 5% depositwith certain government schemes. In general, homeowners can afford a mortgage that’s two to two-and-a-half times their annual gross income. For instance, if you earn $80,000 a year, you can afford a mortgage from $160,000 to $200,000.

Loan rates do not include amounts for taxes or insurance premiums and individual lender terms will apply. Lenders will advertise the lowest rate offered but yours will depend on factors like your credit history, income, other debts, and your down payment. For instance, a good 按揭比較 rate for someone who has a low credit score tends to be higher than for someone who has a higher credit score.

If variable, the rate can fluctuate according to the markets. Variable rates begin much lower than fixed rates and are therefore very attractive. There are caps, which are spelled out in the agreement as to how much the interest rates can increase and how often, so you will know what to expect.

We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team. Shorter introductory mortgage rates might be attractive, but remember that the shorter your initial term, the more times you’ll need to remortgage, potentially paying mortgage fees each time. Longer-term fixed rates offer the chance to guarantee your repayments for longer, but there’s also the chance that, if rates go down, you could end up paying over the odds for your mortgage. Your credit history and credit score are taken into account when getting a mortgage. You can help improve your score by paying your bills on time, checking your details are up to date on the electoral roll and closing any card accounts you don’t use.

Saving for a deposit is helpful, and the more you save, the less you’ll need to borrow for a mortgage. Having a bigger deposit also means you may have access to a wider variety of lenders and more competitive mortgage rates. Introductory interest rate periods are common across all mortgage types. They offer a lower rate of interest for the first 2 to 10 years of the mortgage before moving to the lender’s standard variable rate . Mortgages are a type of loan that are used to buy a property. You’ll make monthly repayments to the bank or building society you borrowed from until the mortgage is paid off.

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