As Independent Financial Advisers when we recommend a mortgage we tailor the mortgage to your specific needs and circumstances.  Before you come to your appointment it is good to have an idea of what you might want whether you are a first time buyer, remortgaging or looking to purchase your next home.

There are different types of mortgage such as fixed or variable rate mortgages.  A fixed rate means that for a specified time frame your interest rate is fixed at a certain figure and will remain at that level.  After your advantage period ends you will usually go on to the lenders standard variable rate.  We often recommend fixed rate mortgages as they offer certainty of payments for a specified amount of time.

Variable rate mortgages do not have a fixed interest rate and therefore your monthly payment could increase at any time.  My thoughts on the matter are that you cannot guarantee what your utilities or the cost of your weekly shop will be next month, but with a fixed rate mortgage at least you know what your mortgage payment will be.

If you do decide on a fixed rate then you have further choices of how long you would like to be fixed in for.  The thing to keep in mind is that with a fixed rate mortgage if you want to redeem your mortgage during the tie in period you will often be charged early repayment charges.  If this will be your forever home then a longer term fixed rate of 5 or 10 years may be ideal, however if you are likely to move in the next few years a shorter fix of 2 or 3 years will be more suitable.

Another choice you can make is on the term of your mortgage.  A typical mortgage term is 25 years, however as lenders have recently become more relaxed over lending into retirement, they have been offering much longer terms with 40 year terms now available with some select lenders.

A longer term can help make your monthly payments more affordable, and for young first time buyers this can make a massive difference in making the transition to home owner less daunting when they are faced with all the initial costs of a new house purchase.  However also keep in mind when you plan to retire. If you are planning an early retirement your mortgage would ideally be paid off by this time when you are likely to experience a drop in income.  Remember that most mortgages now allow you to overpay around 10% of your mortgage balance each year, so if you decide you can afford to pay more you can effectively reduce your original term by making voluntary overpayments.

Sammy McCann BSc (Hons), Cert CII (MP)

13th March 2017

Tailoring a mortgage for you