What type of Mortgage to go for
With quite a wide choice of mortgage types to choose from, it can be hard knowing which to go for. The main types are fixed rates and variable rates, cash back, trackers, no deposit and buy to let.
A fixed rate mortgage will give you a certain time period (usually 1-5 years) where you will be on a fixed interest rate. The advantage of this is that the rate you pay will not change with the base rate and so you will always know exactly what you will be paying each month. This can make things easier but it may mean that if the base rate falls you could lose out on a cut in interest rates but if it rises, you will be protected against a price increase. The fixed rate amount could be set an at amount higher than the current base rate and so you will have to decide whether you want to risk going for that amount, when it could end up being more expensive than going with a variable rate or a tracker.
A variable rate mortgage will change with the base rate, if the financial institution want it too. This means if the base rate goes up, they are likely to very quickly put the rate up, but if it goes down, they may decide not to lower it. This is their choice and so you will not know what the rate might be. It means that it could go down, but it could also go up. A tracker, tracks the base rate and so any changes to that will be immediately reflected in your rate. This is really good if the rate goes down as yours will, but if it goes up, it is not so good.
A buy to let mortgage is only for those people buying a house with the intention of renting it out to others and so is only for a specific type of buying. A no deposit mortgage will allow you to borrow the full value of the house. These can be quite rare and have the advantage of you not having to save up money first, buy do mean that you will have more to pay back and therefore the loan will be more expensive. A cash back mortgage will give you a lump sum when you sign up. This can be useful to buy things for your new house, but you will have to pay it back over the term of the mortgage which could mean that it ends up being quite an expensive loan.
There are therefore many factors to consider and you need to think about which mortgage will work best in your personal circumstances.