13 Feb How Boomers Can Get the Best Deal For Your Mortgage
Understanding mortgages-Getting the best deal
Impeccable research is key when deciding the best place to go for your mortgage. With so many advertisements bombarding the market, it can be a confusing choice, but with careful investigation and deliberation, you will find the best mortgage out there for you.
The main competition lies between banks and building societies. Traditionally, mortgages were solely offered by building societies, as the profit that they yielded was minimal. However, the market expanded and the banks became eager to get on board. The question then arose as to who offered the better deal on mortgages.
Building Societies:, if they operate as mutual societies belong to the members of the society and do not pay out to any other shareholders. This translates to lower interest fees for borrowers which is always good news. However, a building society is not allowed to borrow money from the wealth market that exceeds 50% of its assets. What this means for you is a longer loan period. Simply put, because the building society cannot borrow more than a certain amount you will have more payments in smaller sums. Depending on your income and your lifestyle, this may be the most suitable option for a mortgage.
Banks, on the other hand, are not owned by its customers and so charge fees for services and loans so as to pay their shareholders. This results in higher mortgage rates, but because banks have a free reign on the amount they can borrow from the wealth market, you may end up having a shorter mortgage period. In other words, larger sums with a shorter time to pay. This will probably be a good option if you have money set aside to set off the first couple months of the mortgage as well as access to enough income to support it for its duration without making too many sacrifices. If you have already retired and your pension payments and other resources filter in slowly then going to a building society would perhaps be best.
Boomers need to explore their options thoroughly, even more so where the possibility of future income is uncertain. Typically, credit institutions offer discounts or lower rates for first time buyers. If you do not fall within that category then you need to ensure that your credit is in good order so that the possibility of negotiating for a lower rate will be open to you. Some banks offer a lower rate of interest for persons within retirement age; however, the properties for which these discounts are offered are very limited, often including complexes and gated communities. If you are building your home, this may be an even more difficult process for you as the mortgage you take out will need to cover any unforeseen expenses that could arise- this in itself will push up your mortgage rate.
Using the internet for comparisons for different mortgage rates is a good idea, but this should not replace actually going into a financial institution and getting the information needed firsthand. If you are mindful of your present financial situation and of what your future situation could be like, then a building society might be your best bet. The process of getting a mortgage is a long one, but it will be worth it to see the amount of money you have saved when you go with the option that is best for you.
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