What type of mortgage is right for me?

So you're ready to buy your first home but first you must face the daunting task of obtaining a mortgage. With so many different mortgages available, what do you need to look for?

Choosing the right mortgage for you will depend on your particular needs and circumstances, and the provider will need to make a full assessment of your financial status before offering you a mortgage in principle.

To get you started, here is a simple introduction to the different mortgage types to look out for:

Fixed-rate mortgages

A fixed-rate mortgage is there to make things simple, and should offer you peace of mind that no matter what happens to interest rates, your mortgage repayments won't be affected. There are a number of benefits to getting a fixed-rate mortgage - as well as protecting yourself against rising interest rates, you'll know exactly how much you'll need to pay for the duration of the fixed term, allowing you to budget for other things.

The length of the fixed term may vary - once the term ends, the mortgage will switch back to the lender's standard variable rate (SVR).

Discounted mortgages

A discounted rate mortgage will give you discount off the lender's SVR. Unlike a fixed-rate deal, the interest rates on this particular mortgage can fluctuate but it is always guaranteed to remain lower than the SVR. You're likely to benefit from this type of mortgage if interest rates remain low, and could save you significant amounts of cash each month, allowing you more flexibility in your budget.

First-time buyers

It's not easy to take that first step onto the property ladder, and lenders are recognising that sometimes home buyers need a little extra help. There is usually a wider range of mortgages available for those who have managed to save a large deposit, but of course this isn't easy for everyone to do.

If you only have a small deposit but you have someone who may be willing to help you out financially, then you may have a better chance of obtaining a mortgage with a guarantor deal.

Guarantor mortgages

A guarantor mortgage allows you to borrow a higher amount of money than your income would normally allow, because you have someone else (usually a parent or other family member) acting as a guarantor for the account, i.e. if you fail to make the mortgage repayments, they can step in to help you out. However, if you are able to meet the repayments yourself, and become comfortable with doing so, then you may be able to release the guarantor from the mortgage so that you take on the sole responsibility for it.

Remortgaging

It's not just first-time buyers that need to think about the type of mortgage that's best for them. If you're at or nearing the end of your current term, then you may be wise to look at other mortgages available to you. Usually at the end of your mortgage term, you'll move onto the lenders SVR, and depending on the rate, you could actually be paying more than you need to. Shopping around may help you to find a better deal. You may wish to move onto another fixed-rate mortgage to guarantee your monthly payments and to protect yourself from any imminent rise in the interest rate.

Also if you've been on an interest-only deal, you may want to move onto a repayment deal in order to start paying off some of the capital - unless you have other arrangements in place.

Mortgage advice

Although there's plenty of information on the different types of mortgage available on the internet, making the right choice for you can still be a difficult one - and one that shouldn't be taking lightly, as a mortgage will be one of the biggest financial commitments that you take on.

You may find that seeking the expert advice of a mortgage adviser is the key to helping you find the perfect deal. Not only will they be able to talk you through each mortgage available, letting you know the pros and cons and the suitability for your circumstances, but they will often have access to exclusive deals that you can't find on the high street.

Speaking to an adviser is free and works on a no-obligation basis, so it's often worth a quick call just in case you've missed something in your own research.

Wanting further information? Speak to an adviser today.

Expert Mortgage Advice