Buying a home is likely to be the most expensive purchase you’ll make in your adult life. It’s a big commitment that you could spend many years of your life paying off – often around 25 years depending on your circumstances.
This is why it’s important for you to select the right mortgage to suit your situation. With so many different rates and repayment options on offer by various banks and building societies, we thought it would be helpful to take a closer look at some of the different types of mortgages you could choose.
If You’re a First-Time Buyer
Keep an eye out for mortgages that are specifically aimed towards first-time buyers if you’re getting your foot on the property ladder. Many banks and building societies include incentives that attract first-time buyers, like cashback or a contribution towards the legal costs.
There are two categories of mortgages – variable rate and fixed rate. Many first-time buyers prefer to pick a fixed rate option as it allows them to set a definite budget for the next two, three or five years.
The interest on fixed rate mortgages tend to be slightly higher than on a variable rate mortgage, but so much can change in five years that people often choose a fixed rate to give them some security.
Those who largely work on short-term contracts may be considered as a “high risk” for lenders and it may be difficult for them to secure a mortgage.However, there are tailored mortgages available that are aimed at contract workers, such as the ones offered by Saffron Building Society.
Contractor mortgages are designed to give you the flexibility you need to pay off your mortgage by assessing your income on day rates and finding solutions to help you pay off your mortgage quicker.That means you won’t need regular payslips or accounts to prove how much you can afford to borrow.
A standard residential mortgage won’t be applicable if you’re planning to embark on a self-build project. Unless you already have the money in your bank account, you’ll need to apply for a self-build mortgage.
The biggest difference between these mortgages is that with a self-build mortgage, the funds are released in stages rather than being given to you as a single lump sum. This is so that the lender can ensure that the money is spent how you have planned to and you don’t run out halfway through the project.
Whether you’re looking for a mortgage as a first-time buyer, as a contract-worker, or if you’re building your own home, make sure you take a look at our brief guide on these types of mortgages to see what options are available to you.