If you are looking at buying a property with the aid of a mortgage, you will need to consider how mortgage payments fit in to your finances. The payments you make will be dependent on the interest rates attached to your mortgage. Mortgage payments are usually made at regular intervals, such as monthly or quarterly, and your finances will have to be able to cope with these costs.
Mortgage payments can be affected by the type of mortgage that you take out:
- Interest-only mortgages require you to just pay the interest on the body of the loan each month – but you will have to repay the full sum of the loan, plus any outstanding interest, at the end of the agreed mortgage term.
- Repayment mortgages will demand larger regular payments; these cover not just the interest, but also part of the main body of the loan, so that over the period of the loan you pay the entire sum off, bit by bit.
Additionally, consider how interest rates might affect your payments:
- With fixed rate mortgages, you can be confident that for the agreed-on term, the interest rate on your loan will remain constant. This can help with planning your finances, as you know exactly what costs you will be incurring well in advance.
- Variable or tracker rate mortgages vary with the base interest rate, but potentially offer savings should that base rate fall.
It is worthwhile to seek professional mortgage advice before making any decisions. Fill out our short enquiry form and we will put you in contact with expert brokers who can provide free quotes and guidance.