Mortgages London | Mortgages in London

Posts Tagged ‘Free Mortgage Advice London’

If you are purchasing a property in London for the first time, you are probably feeling overwhelmed with all the jargon that is used to get a loan to buy a home. Variable rate, fixed rate, tracker, APR and LTV are just some of the terms you will hear bandied about by advisors, and unless you understand what each of these really mean it will be difficult to find the right deal to suit your budget. There are plenty of ways to get free mortgage advice in London, from chatting to a broker to researching online, but sometimes the simplest of explanations need to be given before buyers can even begin looking for the right mortgage to meet their budget.

One of the most common question Londoners ask when researching mortgage deals is whether they should choose a fixed rate or variable rate mortgage. The answer lies in how flexible your finances are and how willing you are to take a risk. Another factor to consider is whether or not house prices are rising or falling in London. If they are rising, there is less danger of falling into negative equity, so borrowers may be more willing to go for a riskier mortgage; but if they are falling, it could be a good idea to choose a fixed term, to know exactly what repayments will be.

There are pros and cons for each type of mortgage. Basically, a fixed rate mortgage means that the interest you pay can be fixed at the current rate for a set amount of time, usually between 1 and 5 years. The main advantage is that you know exactly what your monthly repayments will be for the fixed term, avoiding any surprises if interest rates rise, which could potentially cause problems with repayments. Of course, if interest rates should fall, it will mean you are paying more than you would have done if you chose a variable rate mortgage. The other downfall of a fixed rate mortgage is that there is a penalty fee for leaving before the term has been completed.

A variable rate mortgage on the other hand will track the Bank of England’s base lending rate, hence the term Tracker mortgage. The Standard Variable Rate (SVR) of interest is generally around 2% higher than this base rate if the mortgage is from a mainstream lender, such as banks and building societies, and if you have a reasonable credit rating. If you have a poor credit rating, the SVR will be higher as lending is considered a greater risk. Basically, it depends on whether or not your finances are flexible enough to take the risk of rising interest rates with a tracker mortgage, or whether your prefer to know exactly what your repayments will be with a fixed rate over a set term.