These days buying a house is like gaining a degree in finance. Thanks to the fact that most of us are unable to afford a house all on our own, we have to do the rounds of the various loan providers. Finding great loans and mortgages from the millions that crowd our mailboxes is quite a task. You have to keep your eyes open all the time. And you have to weigh each option as objectively as you can. In addition, you do get to find out about all kinds of loans that are put out there for the buyer’s convenience. It is a confusing world, but you have to make the most of it.

While searching for great mortgages with which to buy my home, I came across a very interesting concept. The fixed rate mortgage caught my eye from among the hordes of mortgages that I had come across. What attracted me to this particular mortgage type was the fact that I knew exactly how much I would have to pay every month. It made it easier for me to plan how I would utilize my finances. Sure, unlike in the case of flexible rates, I would not be able to benefit from the market situation when the rates dropped. However, on the plus side, I would not have to cough up greater amounts for when the interest rates decided to rise again.

Of course, the rates do vary from time to time. The market situation is a great determinant of the interest rates that you will have to pay. However, other aspects such as the amount that you are seeking to borrow, your own credit history, and your employment situation will also go a long way in determining how much you will end up paying.

Also, do remember that fixed rate mortgages are generally more expensive than adjustable rate mortgages. Moreover, the longer the duration of your mortgage, the more expensive it will be. Do note that you will be tied to the mortgage for the duration of the term. However, if you are keen to pay off the loan earlier than the due date, you will probably have to pay a prepayment penalty.

If a fixed rate mortgage is not your cup of tea, you could take a look at adjustable rate mortgages or interest only mortgages or whatever other mortgage types catch your fancy. There are mortgage plans to suit everybody. You just have to look exhaustively, in the right places, and check with the right people.

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There are currently around 6 million homeowners who have an interest only mortgage. This type of mortgage means that the monthly repayments that you make are just taken off the amount of interest that the mortgage accumulates. The capitol which you borrowed must be paid back when the mortgage has run its terms.

The interest only mortgage seems to be very popular with those who are house buying for the first time. Recent research showed that the amount of first time buyers taking out an interest only mortgage rose to 18%. The mortgage could be popular because the rates of interest are usually a lot lower than a repayment mortgage. Due to this it is the only type of mortgage that many starting out first time in buying can afford.

However while low rates of interest are a good thing the down side is that when the term of the mortgage comes to an end you will still owe the same amount of money that you started out owing. If you do not have a means of paying this then of course you would have to take out another loan.

Lenders have perhaps become a little lack with this type of loan because years ago you would have to be able to prove to them that you had means of repaying the capitol at the end of the mortgage. Today you can take out an interest only mortgage and having to find the capitol is only mentioned on the bottom of the mortgage agreement.

Ideally those taking out this type of mortgage should have some form of investment that they are able to fall back on and so use it to repay the capitol of the loan. While the interest only mortgage does give the cheapest rates of interest over the long term it is one of the dearest types of mortgage.

If you want to be sure that you can own your home at the end of the mortgage arraignment then you have to have a repayment mortgage, unless of course you already have the means by way of an ISA. This means that part of the monthly repayment goes towards the interest and the other part towards the capitol. If you have an interest only mortgage then you should consider changing a part of it to a repayment mortgage or start saving money in an ISA account.

If you want to check out the rates of interest that come with interest only mortgages then go with a specialist website. You can get several quotes together on one page which makes comparing quotes easy and quick. You also have to take into account the small print of any loan you are considering as this is where you can find the added costs. Costs such as set up fees can vary widely from lender to lender so it is worthwhile choosing a mortgage with low costs or costs that have been waivered. The small print can include valuation fees and a lump sum payment if you should want to switch mortgages within s certain time frame of taking out the mortgage.

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This article will briefly discuss what an offset mortgage is; and how an independent mortgage advisor can help you buy the best offset mortgage.

An offset mortgage links your main current account and/or savings accounts to your mortgage. Every day or month, the amount owed on your mortgage is reduced by the amount in these accounts, before the interest is calculated on the loan. When the money in your savings/current account increases, you pay less on your mortgage. If the money in your savings/current account decreases, you pay more on your mortgage.

When it comes to finding the best offset mortgage, it pays to have expert advice because there is more to a mortgage deal than meets the eye. Your mortgage will probably be the largest financial commitment in your life, and it pays to take time to look at the different options available to you.

There are different types of offset mortgages available on the market. You could look at ‘best buy mortgage tables’ to find the best offset mortgage, but that only gives you superficial information. It doesn’t show you the mortgage’s flexibility; i.e. the ability to underpay, take payment holidays, or overpay, or what the fees and charges are. In the last couple of years, fees for mortgages have increased. Fees can be in excess of £1000, and several mortgage providers are now charging fees as a percentage of the sum being borrowed, for example: a 2% fee on someone borrowing £120,000 on a new low two-year fixed rate deal would pay £2,400. Once fees are taken into account, the best offset mortgage deal may not be the one with the lowest interest rate.

Recent research has shown that the best offset mortgage is not necessarily offered by the top 10 biggest mortgage lenders. The top 10 mortgage lenders offered only 11% of the best 250 mortgage deals available on the market, despite the top 10 having more than a 60% share of the mortgage market. To guide you through this myriad amount of information available, an independent mortgage broker will give you impartial advice about the best offset mortgage, as they have comprehensive knowledge of the mortgage market. A mortgage broker is fully authorized by the Financial Services Authority (FSA) and they have the necessary qualifications to advise you.

Your mortgage broker will perform a ‘factfind’ to learn about your financial situation and circumstances, and your wants and needs. Your broker will assess your ability to repay the mortgage, your credit history and credit scoring profile. Offset mortgages are usually calculated on an affordability basis and not on a simple income multiplier, which allows people with ad hoc financial income, such as a self-employed person, to possibly obtain a larger mortgage than with a standard, more traditional mortgage. All of the information you provide will help your broker obtain the best offset mortgage available for you on the market.

After the best offset mortgage has been sourced for you, your independent mortgage broker will provide you with written details about the mortgage, which will include:

- How much you want to borrow

- The type of offset mortgage you’re interested in

- A description of the mortgage; who the lender is and the interest rate

- Overall cost of the mortgage including the fees

- How much your payment would be if the interest rates increased

- The flexibility of your offset mortgage

An independent mortgage adviser will answer any questions you have and ensure you have all the necessary information about the mortgage market. It is worth spending time with them, as they are there to help you find the best offset mortgage.Resources

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