mortgage in the uk : What To look Out For

2008-04-28 12:02:12

( Financial )



Are you a first time buyer needing mortgage uk. If you have been looking for mortgage in the uk you would surely have made a loan comparison uk.

But what is mortgage in the uk like for you, the first-time buyer. Is a long-term mortgage in the uk a bad idea for you the first-time buyer?

The Chancellor has called for more mortgages at a 10 year fixed rate. This could be very expensive for you, the first-time buyer.

In a recent pre-budget report, the Chancellor suggested that this would be a way to help first-time buyers afford their first home. His reasoning? A long-term fixed mortgage allows for fixed repayments – this makes it possible to budget accordingly.

However, recent independent research concludes that first-time borrowers would have fared better with a series of fixed mortgages at 2 year intervals or even a variable rate mortgage.

The difference between a fixed rate mortgage and a variable rate mortgage can amount to a savings of thousands of pounds.

An even more significant savings would be made on a series of fixed mortgages at 2 year intervals.

Many experts, while acknowledging that first time mortgage seekers need to be helped, claim that the Chancellor’s solution is not the right one.

They claim that what is needed is a flexible solution which allows the borrower to borrow on their mortgage as their circumstances change. One has to consider that first time buyers will want to move up the ladder and so won’t necessarily want to have a long-term mortgage.

On the other hand the type of product the Chancellor suggests could be the solution for a borrower who intends to move into a property for a long period – especially with the interest rate climate being as it is.

Certain exerts believe that the problem with a 10 year mortgage at a fixed rate is that it makes it difficult to borrow additional funds if the borrower decides he wants to move properties.


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