There are a lot of mortgages on the market and it can be an extremely difficult choice deciding which one is exactly right for you and your financial circumstances. Every single lender has many many different types of mortgage deals designed to suit every type of client so regardless of what type of mortgage client you are most lenders have a product to suit.
One very common of these mortgages is the discounted rate mortgage. This type of mortgage is where the mortgage rate is reduced from the variable rate for a set period of time for example 1 to 3 years. The choice of period is the buyers but the longer the reduction is for the lower the reduction will be.
Borrowers are getting a discount from this type of mortgage by paying low interest fees during their initial period, but will save more money overall when the discounted period is short. Once the discounted period ends, the borrower will have to pay the standard variable rate that is offered by the lender. With a variable rate mortgage, interest rates can frequently change and can cause monthly mortgage payments to increase or even decrease each month.
Refinancing after the introductory discount period is an option, but some mortgage companies can charge penalty fees for ending the loan early, however most companies do not charge once the discount period has ended. The point to refinancing at the time is to potentially lock in on another discount period as this will in turn save money against the variable rate mortgage.
Mortgages that carry a discount are extremely popular with the first time buyer as it means they can save as much money as they can, which can be quite important when you are first starting out. The only drawback to this is many can be led into a mortgage that they may find unaffordable in the future due to the artificial way that the costs have been reduced in the early years.
A lot of people who have arranged a discount rate mortgage find that they are in financial difficulties in the future as a result of not be able to pay the mortgage once the discount has finished and the mortgage has returned to the standard variable rate. These people can also find a re-mortgage is also difficult as rates may have increased and any deal on offer at that time may also be more than they can afford.
Discount mortgages are good for people getting on the property ladder and as such having a greater need for cash in the early years. That said even though the mortgage might be cheap at the beginning the mortgage will rise in the future and anyone not considering this is taking an enormous risk with their future.
If you are going for any type of mortgage it is always important to consider what the payment will actually be after any deal ends as this could be the mortgage that you have to live with for 25 years and as such it is very important that you know you can afford it going into the future. Relying on getting a better salary in the future is far from good financial planning and can result in you losing your home.
Everyone wants to save money and not least on their mortgage payments as they are paid every month for years. But you should always think hard before taking any mortgage not least a discount mortgage as the wrong mortgage choice can cost thousands over time and even cost you your home. So make sure you have all the information to make the right choice and ensure you deal with an independent mortgage advisor for your mortgage advice.
One very common of these mortgages is the discounted rate mortgage. This type of mortgage is where the mortgage rate is reduced from the variable rate for a set period of time for example 1 to 3 years. The choice of period is the buyers but the longer the reduction is for the lower the reduction will be.
Borrowers are getting a discount from this type of mortgage by paying low interest fees during their initial period, but will save more money overall when the discounted period is short. Once the discounted period ends, the borrower will have to pay the standard variable rate that is offered by the lender. With a variable rate mortgage, interest rates can frequently change and can cause monthly mortgage payments to increase or even decrease each month.
Refinancing after the introductory discount period is an option, but some mortgage companies can charge penalty fees for ending the loan early, however most companies do not charge once the discount period has ended. The point to refinancing at the time is to potentially lock in on another discount period as this will in turn save money against the variable rate mortgage.
Mortgages that carry a discount are extremely popular with the first time buyer as it means they can save as much money as they can, which can be quite important when you are first starting out. The only drawback to this is many can be led into a mortgage that they may find unaffordable in the future due to the artificial way that the costs have been reduced in the early years.
A lot of people who have arranged a discount rate mortgage find that they are in financial difficulties in the future as a result of not be able to pay the mortgage once the discount has finished and the mortgage has returned to the standard variable rate. These people can also find a re-mortgage is also difficult as rates may have increased and any deal on offer at that time may also be more than they can afford.
Discount mortgages are good for people getting on the property ladder and as such having a greater need for cash in the early years. That said even though the mortgage might be cheap at the beginning the mortgage will rise in the future and anyone not considering this is taking an enormous risk with their future.
If you are going for any type of mortgage it is always important to consider what the payment will actually be after any deal ends as this could be the mortgage that you have to live with for 25 years and as such it is very important that you know you can afford it going into the future. Relying on getting a better salary in the future is far from good financial planning and can result in you losing your home.
Everyone wants to save money and not least on their mortgage payments as they are paid every month for years. But you should always think hard before taking any mortgage not least a discount mortgage as the wrong mortgage choice can cost thousands over time and even cost you your home. So make sure you have all the information to make the right choice and ensure you deal with an independent mortgage advisor for your mortgage advice.
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