Mortgage First Time Buyer Tips

Taking out a mortgage is always a huge decision. With interest rates varying and different mortgages to choose from there are right ways to go about getting a mortgage and ways you shouldn't. Taking your mortgage from the salesman who makes commission from selling is not the best way to go. In many cases, they are going to sell you the costliest deal possible so always shop around and to get an idea of the best deals available. That way you will be better informed should you choose to use a broker or financial adviser.

Some companies will include mortgage payment protection insurance (MPPI) along with your mortgage but you should realise that in most cases, this isn't compulsory. By including the cost of mortgage payment protection insurance in your mortgage, it can boost up the price by hundreds of pounds. Again by shopping around you can purchase MPPI independently at a much lower cost. Of course if you are looking for a 100% mortgage it will cost you more. By going, say, for a 95% mortgage with a deposit, your options are more open with greater savings being made on the repayments. An option you will then have to take into account is where you are going to get the deposit from.

The bottom line is, shop around for your mortgage. Don't go for the first one you are offered no matter how good a sales pitch you are given. Shopping online is a great way to make comparisons from many providers and also allows you to research the different types of mortgage available. Interest Only Mortgage a good option? Anyone needs to consider the type of mortgage they are going to take out before rushing into it, but for the first time buyer this is even more crucial. It is only common sense to go for the best deal possible, but you should also go for the shortest mortgage too. One type of mortgage to consider when taking the first steps in home buying is the interest only mortgage.

Of course as with any mortgage, there are good and bad points to consider. In the long run, the interest only mortgage can end up costing more but the monthly repayments are less. By just paying the minimum interest payment you could leave yourself wide open should the housing market take a downturn. This means that you could be paying more for your mortgage than what the actual property is worth. A way to counteract this is by putting down a deposit of around 10% to 15%, rather than get a 100% loan.

However, you then have to take into account how to raise the deposit. Whichever mortgage you choose to go with it is essential that you have researched it thoroughly and know you can afford to make repayments. Providing you can afford a mortgage and particularly if you think you might wish to sell within a few years, then an interest only mortgage could work to your advantage.

More information : James Miller is a freelance writer specialised in consumer credit, covering topics such as how to deal with bad credit, mortgages and insurance. He aims to help people navigate the financial industry.

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