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Choosing your mortgage

Let's put all this together then. All you have to do is decide on a fixed-rate, discounted or capped mortgage, work out your loan to value ratio, find the mortgage that offers the best rate for your ratio (offsetting any charges against the interest rate) check the multiplier to see if you qualify, compare the discounts against the charges (compensating for the lock-in period) and go with the one that fits in best with your prognostications of income and expectations of how the Bank of England base rate will change.

I don't know about you but I think my head just exploded.

Choose your type of mortgage

It's best to take it a step at a time. First of all, decide on the type of mortgage you want. Ultimately it boils down to one question; are you the gambling type? A fixed rate mortgage will gaurantee that you know exactly how much you will be paying for at least the next couple of years. If you are going to be in serious trouble following a rise in the interest rates, then it could be worth paying a bit extra to make sure you don't end up paying a lot extra. On the other hand, if you could ride out an interest rate rise by drawing on reserves or cutting back on luxuries, then a discounted mortgage will save you money, providing the base rate doesn't go up too far.

It's not easy, is it? No-one knows what the economic climate will be like in a year's time, so whichever one you choose it's a gamble (although less so with a fixed rate mortgage).

Shopping around

Here is where it gets tricky. There are hundreds and hundreds of different mortgage packages out there. The best thing to do is to get a feel for what is out there so you have some insight as to whether a particular mortgage is good value or not. Luckily, there are web sites where you can put your details in and search for mortgages that would be available to you. Have a look at these ones:


It's also useful to go and see an independant financial advisor (a lot of estate agents have them in-store) to get some ideas. An IFA can often find you a better deal because he can do deals with banks and building societies to get better rates. Of course, if his fee is huge (sometimes the bank pays his fee, so check this), then that could cancel out any gain you get from the improved rate.

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