If you are like most people, taking on a mortgage to buy yourself a home, is going to be one of the biggest and scariest commitments you will ever make. 

Written by Matt Payne

A mortgage, is not like any other loan because it is secured on the value of your house.  So knowing that if you miss a payment might mean the lender starts to go down the road of repossession proceedings, means that you have got to be sure that you can afford to pay it. 

The lender will carefully assess your ability to pay what is required on a monthly basis taking account of what other commitments you have.  Because interest rates can change they will stress test it to make sure that if your payments have to go up, that you can still afford to stay there. 

Most lenders will not lend you all of the money that is needed to buy the house and the more that you can put down as a deposit, the better deal they are likely to be able to offer you.  

Most people choose to pay their mortgage over an extended period of time – for a first time buyer this is typically at least 25 years but it can be longer and the longer the period that you choose the lower the monthly payment required each month is.  However, this also means that you have to pay more interest so it is really important to keep your affordability under review as if you can afford to overpay you can significantly reduce the term and the total of amount of interest that you have to pay. 

Choosing which deal suits you best is not as simple as it sounds, many people like the security of a fixed rate so they know where they stand but these deals can be inflexible and as life has a habit of throwing up challenges, it is important to realise that there can be large penalties on these sort of arrangements. 

Buying a house also involves making a large commitment in terms of upfront costs and whilst some mortgage deals look very appealing, it is important not to be dazzled by an attractive rate of interest without considering the upfront costs of the loan.

We believe that mortgage advice is just part of an overall bigger picture which is why all of our advisers work alongside financial planners to make sure the whole context of your future financial plan is taken into account. 

When you take out your mortgage your lender will highlight to you the importance of keeping up with the payments.  This mortgage risk warning is often underestimated.

Whilst most people under normal circumstances will make their required monthly repayment, we all know that changes can come quickly and suddenly and without warning.  The recent Covid-19 pandemic has shown just how vulnerable we all are.  This is why we always recommend a “self-cancelling” mortgage so that you know that whatever your circumstances, if you cannot meet the payments yourself, the payments will be met by an insurance company. 

Protection advice is therefore part and parcel of our process to ensure that all your current arrangements are taken into account and you are given all the help you need to understand how to properly protect yourself in the event of suffering an illness, accident, involuntary redundancy or premature death.   

As an Openwork appointed firm, you can be sure that we will only work with reputable lenders and insurance companies who have been selected not because they offer the cheapest premiums but because they offer the best cover and more importantly to you, have a reputation for paying their claims.

Your adviser will give you a list of all the companies we work with.  

 

 ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’