Videos | March 14, 2013

Choosing a mortgage

What do capping, collaring and ARMs have in common? They are all terms associated with mortgages.

Selecting the right mortgage for your circumstances is an important choice – after all it’s designed to be with you for many years. As this video for ING’s Be Good at Money says, don’t feel pressured to settle for the first offer that comes along. Keep researching and keep asking questions.

Fixed rate or variable?
Broadly speaking mortgages can be grouped into two categories: fixed rate and variable.

  • A fixed rate mortgage means the interest rate won’t change for a set number of years. This protects against rate rises, critical if your salary won’t cover a sudden increase in your monthly instalments.
  • A variable rate loan means movements in financial markets can change your interest rate from month to month. The idea is you’ll pay less if interest rates go down but you’ll need to have the means to pay more if rates go up.

To fully understand the differences between mortgage options it can pay to ask a specialist.

Check the fees
When comparing mortgages check if there are establishment fees, on-going costs and any compulsory insurances. And ensure you understand penalties for making extra payments or paying off your loan early.

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eZonomics team
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