Mortgage Types and Advice for First Time Buyers

Currently the UK housing market is in a period of stagnation having declined 3.6% since August and with house prices predicted to lose value of up to 10% in 2011, now is an increasingly good time to consider buying a property.

With the increasing number and complexity of mortgage products on offer by many mortgage providers, finding the best mortgage based on each home owners circumstances is vital. The importance of selecting the best mortgage advice can be underlined by the amount of time but more importantly the amount of money a mortgage advisor can make you on an informed decision.

The most popular types of mortgages today are fixed rate, standard variable rate, tracker and interest only.

A Standard Variable mortgage differs from a fixed rate mortgage as monthly payments can differ each month in view of the base rates and on the finance providers' interest rates.

A tracker based mortgage is similar to a variable mortgage but uses the Bank Of England base rate and a certain percentage (that the financial provider will add on) as a way of calculating monthly payments, Currently the Bank Of England's base rate has been at a low interest level for a prolonged period of time and many tracker mortgage holders are currently low mortgage repayments each month.

Fixed rate mortgages allow homeowners to keep the interest rate at a constant throughout the entire period of repayment. Currently the amount of fixed rate mortgages that have been approved has decreased significantly (especially during the last two years). The likelihood of approval now is more strongly linked to a larger deposit of something like 25%. Fixed rate mortgages considered stable plans; as the interest rate doesn’t vary, meaning payments will be the same for each month. This is good for people who want to know where they are with their financial commitments.

Interest only re-payable mortgages act for a locked in period of time, where the mortgage holder repays the cost of their interest (not the capital) only. During times of challenging financial conditions, an interest only plan can help mortgage holders be released from repayments for a specified period. Although not as common as the other previously discussed mortgages, some mortgage providers do offer this service and mortgage plan to homeowners that are struggling to make their repayments.

The Importance of Credit
Mortgage approval rates are notoriously low at present as more and more mortgage providers are cautious about who they are will lend money to as there have been so many repossessions due to homeowners defaulting on payments and lending to the general downturn of financial markets. Even though house prices are falling, down 3.4% in the last quarter and are expected to fall by a further 10% in 2011, most lenders now require a large deposit to show they are determined about owning a home. A good credit rating is much sought after and often crucial during such hard economic times. Mortgage providers consider first time buyers as a risk and this is why large deposits are now required.

Harry is a internet consultant who has a vested interest in the UK mortgage market as he is a homeowner. He therefore writes occasional overviews about finance and mortgages in order to help people find the best mortgage advice for them. Harry has found that the UK finance market is difficult at the moment and speaking to a financial advisor is beneficial. Consider http://www.bestmortgageadvice.uk.com