A mortgage is something which some people do not think too much about. They are so desperate to make sure that they get the house they want that they may just go with the first mortgage deal they are offered. However, a mortgage is a very long term loan and therefore will cost a lot of money. It is likely that you will pay the asking price of your house three times over before you have paid off the mortgage because the interest costs are so high. Therefore it is important to choose the right one.
There are two main choices with mortgages, an interest only and a repayment. The repayment mortgage charges you a fixed amount each month which pays off some of the debt as well as some interest on top which will normally vary depending on the base rate. The interest only mortgage will just demand you pay back the interest on the loan and you will be expected to invest money elsewhere in order to accumulate the lump sum to pay off the balance at the end of the term of the loan.
The choice between these is important. If you are not self disciplined and unlikely to be able to keep investing to pay off the loan then it is probably best to go with a repayment mortgage. Then you have no choice but to pay it back. An interest only mortgage is more flexible and means that you can invest as much or as little as you like and where you like. You can opt for it to be arranged that you pay it off early too and this can save you a lot of money in interest payments.
Interest rates on mortgages can vary a lot. Some are fixed for a certain time period and then become variable and some are always variable. Some track the base rate and others do not. It is a good idea to familiarise yourself with all of the options so that you know which will be the best for you. It is hard to predict interest rates and work out whether a fixed rate will work out for the best or not but it will mean that you know exactly how much you will be paying per month for a while.
It is worth remembering that although you may be tied in with some mortgages, other you are not and so if you do see a better rate elsewhere you can always change. There may be an administration fee associated with this but as long as you factor this in to your calculations, you will be able to work out whether it is financially better for you to change.
With so many mortgages around and so many options, choosing which is the best mortgage is something which needs to be done at the particular time that you need one. It depends on your own situation as to which one will suit your needs.