Variety may be the spice of life, but when it comes to mortgages, the sheer amount of choice available could leave you spinning.
With thousands of products to choose from, you could easily spend days – even weeks – scratching your head in confusion whilst browsing through the overcrowded mortgage market.
So if you’re after a mortgage but don’t know your ‘offset’ from your ‘capped rate tracker’, read this helpful guide and you’ll soon be able to quickly and confidently draw up a shortlist of informed mortgage choices.
The Credit Crunch and Mortgages:The credit crunch had a huge affect on the number of mortgage deals available to homebuyers. In July 2007 there were nearly 16,000 products available across the UK market, but just two years later, that number had shrunk to less than 1,400 – a reflection of the near-barren lending pots of cautious (or broke) banks and building societies. However, the number of available deals is slowly growing again as more lending cash becomes available. Also, post credit crunch, the number of high LTV (loan-to-value) mortgages dwindled, meaning homebuyers needed a larger deposit to get on the property ladder. Fortunately, higher LTV mortgages are starting to appear again – much to the relief of prospective homebuyers who can only afford deposits of, say, around 10%.
Anyway, the first step in picking through the many types of mortgages available is to…
…halve the field
Basically, there are two different ways to repay mortgages – repayment (capital and interest) and interest-only– and deciding on which way to repay will vastly narrow your choices.
Next - Part 2: Repayment Mortgages
