Obtaining cheap mortgages is a lot easier than it used to be due to the many financial comparison websites that give you the opportunity to sift through a wide range of mortgage options. Gone are the days when you had to traipse around banks and building societies to look for a deal that would best suit your circumstances. Today, there is a lot of advice online when it comes to financial matters, and when you've weighed up some comparisons, you can move ahead with confidence.
What are cheap mortgages?
These are financial products that are aimed at providing you with the best mortgage deal available. Many companies will offer cheap mortgages and will be hoping to win your business, but you need to fully understand what your options are. A mortgage is a loan from a company to enable you to perhaps buy your first home or upgrade to a larger property. It can also provide financial backing for an investment in a property that you won't live in but will rent out. There are a number of types of mortgage, and it's as well to understand how they differ before making a decision.
- Variable interest rate: this type of mortgage means that payments fluctuate, usually in line with what official interest rates for the country are set at. They are popular with owner occupiers, who have a little leeway if interest rates go up and will benefit if lower interest rates are passed on by their lender.
- Fixed interest rate: the interest rate you pay is fixed for an agreed period of time between you and the lender. It could be for two or three years or up to ten years. It gives you the security that you know exactly how much you will be paying each month for that given period of time. You won't benefit from a reduction in interest rates, but you will be protected if they rise.
- Split interest rate: you can choose, if your lender agrees, a split rate whereby part of your loan is fixed and part is at a variable rate.
How do cheap mortgages compare with other similar products?
When you are researching cheap mortgages, you should bear in mind that there are often terms and conditions you need to check. You may discover what you think is the best deal in terms of interest rates, but you need to understand the small print. Some lenders may not permit you to rent out rooms if it is your primary residence, or allow you to rent the whole property until you have made repayments over an agreed period.
What risks and rewards are there with cheap mortgages?
If you keep up your repayments, then you will be the proud owner of a property that is likely to have increased in value at the end of the mortgage term. Your home is at risk if you don't keep up the regular repayments, so bear that in mind when you enter into a loan agreement.