Mortgages – do they have to give you a headache?

Mortgages: rarely has one word been loaded with so much meaning. They make it possible for you to own your own house, but they are also something resolutely adult, full of complications and confusing terminology. Do they have to give you a headache? As the housing market continues to boom, first time buyers are asking themselves if they can afford a place to call their own. In the south-west of England, particularly, it can feel like you could pay tens of thousands of pounds and still only afford a shoe box.
Many people are now looking to buy in up and coming areas, possibly a touch run down, but with ‘potential’. They cross their fingers and hope that these cheaper houses or flats might appreciate in value in years to come. In recent years, the trend in house prices has been upwards, but a recent tremble in the financial markets has once again had people talking of a ‘realignment’.
However, the other option of course is renting, good if you are moving around frequently, but not so attractive if you like staying in one place and putting posters up with blue-tack. The total amount of local housing stock has also declined substantially since the 1980s, and most private tenancy agreements are Assured Shorthold Tenancies, more favourable to the landlord than the old Assured Tenancy.
The other issue in the buying versus renting debate is the old ‘money down the drain’ argument. As challenging as home-owning may be, at least it means that you can pat your bricks and mortar and think, ‘this is mine’. In clear financial terms, home-owning is also better value for money over the long term. A 2005 survey by Abbey showed that on average a home owner will pay £37,650 less over twenty-five years than renters.
So, if you decide to take the plunge and look around for a place to buy, how on earth do you go about it? There are hundreds of companies selling many types of mortgages: capped rate, buy to let, variable rate, and tracker mortgages are just a few of the options available.
Financial books can be helpful, as can Internet sites that help you find and compare mortgages, but don’t forget that the old fashioned approach of going into your local bank can work just as well. After all, staff know the difference between the many mortgage types which can swiftly give the non-specialist a large headache.
Each mortgage seller must also provide you with a Key Facts Illustration (KFI) to make it that little bit easier to compare and contrast different mortgages, and to understand what features are being offered.
So, if you’re keen to have a home of your own, a place that satisfies all those clichés about ‘home is where the heart is’, head down to your local mortgage seller and keep your eyes peeled for the property of your dreams. The whole process might be easier than you think.