HOME IN ON THE BEST MORTGAGE
In your present position, getting the right mortgage could be paramount, both in the short and long term. You’ll find that most banks and building societies offer mortgages, as well as specialist mortgage lending companies. If you change lenders but don't move home it's referred to as a 'remortgage'.
A quick guide to choosing a mortgage
Where do you start? You can get a mortgage direct from the lender (banks, building societies and specialist mortgage lenders), or you can use a mortgage broker. You can buy based on 'information' only or get advice and recommendation on a mortgage that suits your particular needs. At a time when you have enough on your hands, it makes sense to take the advice and recommendation route.
Methods of repayment
There are two main ways to repay your mortgage are repayment and interest only.
With a repayment mortgage you simply make monthly repayments for an agreed period of years (the 'term') until you've paid back the loan and the interest.
On the other hand, an interest only mortgage requires you to make monthly repayments for an agreed period, but these will only cover the interest on your loan (endowment mortgages work in this way too). You'll normally also have to pay into another savings or investment plan that'll hopefully pay off the loan at the end of the term.
In certain circumstances, these can useful. Some mortgages offer you options to vary your monthly payments, or to combine your mortgage account with savings and other income - these are called ‘flexible’, current account and 'offset' mortgages.
Interest rates dominate the headlines again and again, and for good reason. When taking out a mortgage you’ll be faced with a range of interest rates to choose from. For example, 'variable' and 'tracker' rates change in line with Bank of England rates, 'fixed' rates are fixed for a set number of years, and 'capped' rates have a variable interest rate with a ceiling so your payments won't go above a set amount.
A lender may well require you to take out life insurance to pay off your mortgage should you die. This is known as Mortgage Protection Life cover. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job – this is known as Mortgage Payment Protection Insurance (MPPI).
Once you take out any kind of loan, it's very important that you make all the repayments in full, and on time. If you fail to do so you could lose your home if it's a mortgage or your loan is secured on it. It could also affect your credit rating.
Mortgages are usually the biggest single financial commitment that you enter into during your lifetime. And when you have many added responsibilities as a single father, it is one that you cannot afford to get wrong. It’s a decision that should be made with the help of a friendly – but independent – expert. Our Financial Advisors could help you home in on the best mortgage for the next phase in your life.