Getting a mortgage is an important decision that should not be taken lightly. This is a long-term debt that can take many years to pay off. You have to be sure that you are comfortable making this kind of commitment and incurring debt that will take many years to pay off.
To give an idea of the kinds of payments to expect at different interest rates a mortgage calculator can help, and one of the best around is at http://www.moneysupermarket.com/mortgages/calculator/. By knowing what the interest rates are and the payments that will be required it will be possible to select the best mortgage for your requirements.
When considering buying a home and applying for a mortgage it is important to consider the factors that can affect the payments that will have to be made over the life of the mortgage. It is best to shop around and check the rates and plans being offered by various mortgage brokers or agents.
A mortgage is a long-term debt and the principal will only be paid after the interest has first been paid off. There are several types of mortgages to choose from and you must decide what type of mortgage is best for you. There are fixed rate mortgages, variable rate mortgages and adjustable rate mortgages. Each of these has advantages and disadvantages depending on your goals and income level.
Here are some things to ask the mortgage provider.
- Will you have an open, closed, or convertible mortgage? Again, choosing one of these will depend entirely on your financial situation now and in the future. This should be discussed with a qualified mortgage broker.
- What are the mortgage features and options that are best for your particular needs? Here are some things to consider. Would it be best to have a short or long term mortgage?
- Would it be better to make less frequent or more frequent mortgage payments?
- Is it best to have a short or long amortization period? Will your mortgage allow you the ability to make prepayment or lump sum payments?
- Will you have the option to transfer your mortgage to another home should you decide to sell?
- How will factors like more frequent payments and different amortization periods affect the total cost of the mortgage?
- What kind of options will you have should you not be able to make a payment?
- Would you be able to skip one payment per year or apply any prepayments to the month that you are short of money? Are there any fees to be paid if the payment is late and how much are these fees?
- Will you be able to change the size of your mortgage payment if you can afford to start paying more and will you be able to make larger payments to pay the mortgage off more quickly?
- Are there any fees for setting up or renewing the mortgage and how are these fees calculated? Is there a way that you can save on interest charges?