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If you are a resident of the UK, and you have been thinking about purchasing your own home, you may be a little overwhelmed by the variety of options available. Many home buyers, including first time home buyers, find the process of obtaining a mortgage quite bewildering. If this sounds familiar to you, you might benefit from a bit of savvy UK mortgage advice.
Before you apply for a mortgage, it is important to consider how much you can reasonably afford to pay for a home of your own. Many UK mortgage lenders will try to convince you to buy a more expensive home than you can really afford; however, doing this will only cause you financial stress down the road. Take an objective look at your personal finances, and determine how much you can reasonably afford to pay each month.
Making an assessment of your finances will also help you determine which type of mortgage is right for you. There are a wide range of mortgages available in the UK - choosing the right one will help you comfortably attain home ownership; the wrong one can lead to financial ruin.
The two main types of home loans available in the UK are the fixed rate mortgage and the adjustable rate mortgage. When obtaining UK mortgage advice from a lender or broker, you will often hear that an adjustable rate mortgage is the ideal solution, because you will often pay a lower interest rate. This can be a good way for a first time buyer to purchase a larger home than he or she could otherwise afford; however, it is important to understand that the interest rate on an adjustable mortgage can increase over time. This means that your mortgage payments can substantially increase after you purchase your home.
When you take out an adjustable rate mortgage, you are essentially taking a gamble on your future earnings potential. As long as your earnings increase, you will still be able to afford your monthly mortgage payments; however, if raises and bonuses do not pan out as you had hoped, your mortgage may become unmanageable.
For many consumers, it is better to go against the mortgage advice of a UK lender, and choose a fixed rate mortgage instead. Your initial interest rate will be a bit higher than with an adjustable rate mortgage, but you will not have to worry about your mortgage payments increasing over time.