Shopping around for mortgages

When looking for a mortgage, there are some fundamental differences in the type of mortgages that the potential borrower should be aware of. So when you go to your mortgage lender, have some idea in your head of the type of mortgage that you want.

The Fixed Rate Mortgage provides an element of stability in repayments over a fixed period of time, so the borrower is assured that the rate will not shoot up due to fluctuations in the market. However, the borrower may also lose out if the market interest rate decreases, as the lender is not allowed to change the rate.

The Adjustable Rate Mortgage may also be fixed for a short while during the initial term of the mortgage, but these mortgages are eventually subject to the vagaries of the market and will go up and down accordingly, so your repayments will also fluctuate.

A Simple Interest Mortgage is governed by a continually negotiated daily interest rate and although you may pay a higher monthly repayment, you may save in the long term.

A Shared Appreciation Mortgage is where your lender may agree on a lower interest rate but will expect a share in the appreciated value of your house. So when you sell your house, the lender will be entitled to a portion of the profit.