Residential Mortgage..

For many people, a mortgage is likely to be their single largest and most long term financial commitment, so it pays to explore all the options. Selecting the best mortgage to suit your circumstances is vitally important, which is why it is essential to take professional advice and so make sure you get the most appropriate scheme from the huge number of mortgage choices available.

With there being so many different types of home loans available, mortgages can be confusing. However, with a little homework, it is possible to gain a basic working knowledge of the subject and an understanding of the terminology. In brief, there are three major decisions that every mortgage borrower has to make.

The first decision is to choose how long to arrange a mortgage over (also known as the term of the mortgage) with this decision having a significant impact on your monthly payments. Whilst a longer term will usually give lower monthly payments, it will also lead to an increase in the total interest you pay over the mortgage term. Our normal advice is to select the shortest possible term that comfortably fits in with your budget.

The second decision is to select an appropriate interest rate scheme. Lenders may at different times offer variable, discounted, tracker, fixed, capped, cap & collar, drop lock and stabilised rates. These all have different advantages and drawbacks and suit different borrowers with different needs. This is where professional advice is very important, as it will help you to select which type of scheme is generically best for your situation, and then assist you to select a specific scheme from a specific lender.

The third decision is to elect how the amount borrowed (also known as the capital) is to be repaid. Here, the decision is between a repayment or interest only mortgage. With a repayment mortgage your monthly payments will include both interest and a portion of the amount borrowed, so that when you get to the end of the term the mortgage will be paid off. With an interest only mortgage, you simply pay interest to the lender during the course of the loan (giving lower monthly payments than a repayment mortgage), but your debt never reduces. This means that at the end of the mortgage term you owe your lender exactly the same sum as at the beginning.

In order to clear the amount borrowed on an interest only mortgage, you will normally have to make payments into a separate investment plan, which is designed to build up sufficient funds to repay the loan. There are a number of choices of investment plans, including Endowment policies, Personal Pensions and ISAs. However, repayment of the amount borrowed on an interest only mortgage could also come from another source, such as an inheritance, or the sale of another property.

A recent addition to the available mortgage options are Current Account or Offset mortgages, which have a set of advantages that make them suitable for certain borrowers. In brief, both work on the basis of giving you an interest rate on your savings equal to the mortgage rate charged. The overall effect can be for you to pay less interest on your mortgage and to make your savings work harder.

When choosing a mortgage, it is important to consider not only the benefits of various mortgage schemes, but also the potential pitfalls, such as early redemption penalties or tied-in insurances, which can often take the gloss off mortgages that have attractive headline interest rates.

At Coast to Coast, we have the experience and specialist qualifications that enables us to provide personalised independent mortgage advice for your specific circumstances.

Following an initial meeting which is conducted without charge or obligation, and at which we will examine all relevant issues, we will also discuss the appropriate payment options if you wish us to act for you. If you then wish to proceed, you decide which of these payment options you would like to select. These options are informed by the fact that mortgage providers will in general pay a commission, so it makes sense to use this wherever possible to offset our charges.

For new clients we normally offer the following payment choices.

Either a fixed fee of £195, chargeable on application, in addition to which we will retain any commission received from the lender. On completion of the scheme, 40% of any commissions received by Coast to Coast Financial Planning Services in excess of £695 from the scheme provider will be rebated to you.

Or a fee of 0.5% of the mortgage amount, subject to a minimum of £695, and a maximum of £1295, chargeable on application, with all commissions received from the lender by Coast to Coast Financial Planning Services Limited refunded to you.

For returning clients for whom we have arranged a previous mortgage we are also able to offer a commission only option, so no fees are required.

Your home may be repossessed if you do not keep up repayments on your mortgage.