Applying for a mortgage

Before you consider applying for secured loans such as mortgages, it is important you think carefully about your finances, and decide what repayments you will realistically be able to afford each month. There are many different types of mortgage packages available, and you should do some research on the Internet or seek professional advice from an independent financial adviser so that you can find the right deal to suit you. The Council of Mortgage Lenders (CML) has a good website, CML.org.uk, which provides a wealth of information on all types of mortgages, and also provides consumer guides on all aspects of home buying. You can also get mortgage information from FSA (Financial Services Authority) which is an independent service that provides all types of impartial financial information for consumers.

Fixed Rate mortgages can be useful for those who find it difficult to manage their budgets, as the repayments are set at one constant level for an agreed period. This will mean you know in advance what you repayments will be, so that you can plan accordingly. If rates go down you will not benefit, but also if they go up you will not have to pay any more until the agreed fixed rate period is over. At the end of a fixed rate period you will normally be automatically switched to a standard variable rate mortgage deal.

Tracker mortgages are slightly more complex. These are a type of variable rate mortgage in which the interest rate is set above or below the base rate. This then tracks the base rate up or down, and will only change if the base rate does. This will mean you will not be able to accurately predict what your mortgage repayments will be over a year, as rates could rise and fall several different times, but it does mean that you will be able to take instant advantage of any lower base rates.

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