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Mortgage repayment calculatorWork out how much your mortgage repayments will be.
Before you start looking, make sure you’re certain of what you’re looking for – that way you won’t get lost in the forest of mortgage deals out there.
Remember that the mortgage you choose is going to have an impact on your monthly finances for a number of years, so it’s important to shop around for the best mortgage deals.
Make sure you’ve considered the following before starting your mortgage search…
There are two main types of mortgage interest rate:
Fixed rate mortgages can be great if you’d rather know what you’ll be paying, or if you’re on a tight budget and can’t afford for your payment to go up. Fixed rate mortgage guide.
Variable rate mortgages may be for you if you don’t mind taking the chance of your payment going up. However, if rates go down, you could end up paying much less in interest. Standard Variable Rate, tracker or discounted mortgage guides.
Only consider a variable rate mortgage if you can afford a payment that’s quite a bit higher than you are quoted at the outset. Variable rates can go up as well as down – your payment could increase by hundreds of pounds later on, so make sure you can cover this.
Strictly speaking, you should aim to set your mortgage term for as short a period as possible as you will not pay as much interest. However, a shorter term does mean higher monthly payments.
A good compromise is to set a term at a level where you can easily afford the payments, and then overpay in addition (you’d need to make sure your mortgage allows this, before applying). Then, if you fall on hard times or need to reduce your payment unexpectedly, you can pause the overpayment part to give you some breathing space.
When considering the term you should also think about how long you would like the initial deal period to run for. Shorter introductory mortgage rates might be attractive, but remember that your payments will probably increase later on when the initial deal ends. If you remortgage again after this period, you may find that the cost and upheaval of regular remortgaging, outweighs any saving you get from a lower short term rate.
Longer term fixed rates have their pitfalls as well as, if rates go down, you could end up paying over the odds for your mortgage, while others enjoy lower rates.
The deposit you have to put down (or equity you already have in your home) plays a crucial part in the best mortgage rates you can get:
The higher the mortgage in relation to the value (or purchase price) of your home (LTV), the greater the risk to the mortgage lender. The greater the risk to the mortgage lender, the higher the rate you’ll pay.
You’ll see that the mortgages in our Best Buy tables all state a maximum LTV – this is the highest possible proportion of borrowing against property price or value that you can have on that mortgage. Loan-to-value (LTV) guide.
A mortgage that allows you to overpay, underpay, take payment breaks and/or borrow back money is often referred to as a flexible mortgage.
If you think you’ll want to overpay, or to have the option to pay less or suspend your payments later (during a planned sabbatical for instance), you’ll need to make sure your mortgage will allow this.
Another thing to consider, if you’re thinking of moving in the next few years, is a portable mortgage that allows you to take your borrowing from your current home to the next.
A portable mortgage means that, because you don’t have to finish one mortgage and start another one, you can avoid having to pay both an Early Repayment Charge on one mortgage and set up fees on a new one (although there will normally be a porting fee, this will be a lot less that the fees you would have to pay if taking out a new mortgage).
Best Buys Compare 2 year fixed rate mortgages Compare 3 year fixed rate mortgages Compare 5 year and over fixed rate mortgages Compare variable and tracker rate mortgages Compare discounted rate mortgages Compare buy-to-let mortgages
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