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If you're thinking about getting on the property ladder, it's likely that you're going to need to get yourself a mortgage. Thankfully, there are a lot of good deals on home mortgages around at the moment through the likes of Santander, but there's still a lot to think about before you get round to signing on the dotted line.

Type of Mortgage

Do you want an interest only, or a repayment mortgage – did you even know that there were different types? General advice is to go for a repayment mortgage, but interest only deals are cheaper and can be the right choice if you haven't got a lot of money.

Type of Rate

Standard variable (which means it changes), fixed (which means it doesn't) or discount deal (which means you're on a really good rate for a period, and then it changes to another). It's the rate which makes mortgages complicated, and make a good mortgage calculator a useful tool to have around. At the moment, with rates low and not set to rise for a while, a decent tracker deal (where the rate follows the Bank of England base rate) may be the best option. With discount deals, always check the small print to see what happens after the discount term ends.

Deposit

Most banks will expect at least 20% deposit, though in certain circumstances and with certain governmental schemes you can get less (if you're buying a brand new house, for example). Generally speaking it's a good idea to put down as much deposit as you possibly can, because it makes the total amount of money you need to spend on your mortgage that much smaller. However,  if the house needs a lot of work, it might be worth saving some cash in the bank, and spending it on a renovation which will increase the value of your property.

Term

How long are you going to be paying off your mortgage? Usually mortgages apply for 25 years, but it's not always the case and in certain circumstances it can be beneficial to get shorter (or longer) term deals.

Repayment Penalties

If your financial circumstances change can you pay off your mortgage quicker? Or will you have to pay a penalty for paying back too quickly? Are you allowed to miss one repayment, what will be the penalties if you do? All of this is more related to the small print, and whilst it's important, it should be your smallest consideration.

Ultimately, the most important thing is to work out which deal is cheapest, which means the one where you pay the least over the entire period of the deal. Work that out, and then when you've got down to a few good candidates, then it's time to look at the finer details.

 

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