Choosing a Mortgage Lender: Some Things to Consider

With so many options available, from first time buying to remortgaging, make sure you shop around to find out what your best mortgage deal is. The first step to take is to work out the best mortgage type to go for. The most typical options being:

A Fixed-Rate Mortgage

A fixed-rate mortgage has the interest rate fixed for a set amount of time (which can be anything from approximately 10-50 years), after which the remaining balance is paid in full. The benefit of this kind of mortgage is knowing exactly how much you need to pay back each month. If interest rates go up, your amount is set and stays the same. However, it will be the same case if rates go down and you will not be able to enjoy a lower rate of repayment (if interest rates drop significantly, you can always refinance your mortgage).

An Adjustable-Rate Mortgage (ARM)

With adjustable-rate mortgages the interest rate will fluctuate within minimum and maximum rate caps. The benefit of this kind of mortgage rate is that initial rates of repayment are lower than the fixed-rate mortgage. Adjustable-rate mortgages are good for those who are experiencing a market boom and appreciation is high, or for those not who expect to move within a short period of time, or for those intending to refinance. With this kind of mortgage remember to watch out for the rate of interest after the adjustment period. Ensure that you have budgeted for this increase in payment.

Work out the best mortgage type for you, check out best mortgage loans available, and best refinance mortgage rates. (Tip: use a search engine to find the best mortgage calculator around, to help you work out the best mortgage for you.)

The next thing to consider is which company to go with. Find out who offers the best deal or rate for you, based on the kind of mortgage you are going for and your credit history. Most banks and lending companies will want you to have a good clean credit history and secured income before considering you for a mortgage loan. That's not to say that poor credit history means instant refusal, it just makes it trickier if you have black marks upon your credit history report. Be upfront with your bank or lending company, they will do the research and find it regardless, so best to let them know so you don't waste any time with a lender that refuses to accept poor credit. When choosing your lender, read up on reviews, check customer feedback, and find out if there have been any problems or inflexibility with the lending company. A good bank or money lending company will help you if your financial circumstances change and you need to reevaluate your repayments. Note that it is worth having a pre-approved loan done too, before even attempting to shop around for a home; otherwise you may end up finding your dream place, and seeing it whisked away due to being unable to secure a mortgage on it!

Whatever mortgage and lending company or bank you decide to go with, make sure you keep a good rapport and let them know right away if your financial circumstances change. Defaulting on mortgage repayments will result in bad credit, making it difficult to obtain loans in the future. So talk to your bank or lending company before things get out of hand.

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