Mortgages - Richard T Lishman

Mortgages

Since the global financial crisis, the goal of home ownership has been pushed even further out of reach for many potential buyers, dentists being no exception to the rule. Despite interest rates being a little lower for those who have already taken out a home loan, for first time buyers it is difficult to amount the large deposit that many lenders demand. In the current climate there is no denying that having access to the best financial advice is an asset that few can afford to be without.

For those who live in Britain, owning your own house is an aspiration which most harbour. Which is kind of bizarre considering the stressful, nerve-wracking process that ensues, even for those with a good understanding of finance. Trying to get your head around the terms and conditions of a complicated mortgage arrangement can be difficult, but it must be carried out scrupulously considering the size of the investment that is to be made. At any one time there are more than 7000 mortgages available, all with subtle yet consequential differences, so seeking the services of an experienced Independent Financial Adviser should be seriously considered.

With so much to consider, here is an introduction to three of the more popular mortgage deals:

Repayment mortgage

This is probably the most common type of mortgage, it is easy to understand and is frequently taken out by first time buyers. Monthly repayments will reduce the total of the capital that is owed to the bank, whilst paying off the interest amounted over the previous month at the same time. This mortgage scheme has been constructed in away that, providing monthly repayments are met, the homeowner will be able to pay off the whole loan over the prescribed term (usually in the region of 25 years).

This option is generally viewed as one of the safer options, for example, there is no need for worries over investment returns. Though, the downside of this is that there is no opportunity for the buyer to take advantage of additional investment opportunities and it will be difficult to repay that loan early.

Interest only mortgage

This type of mortgage usually attracts those who are a little more venturesome. With this model, as the name suggests, only the interest is repaid and decreasing the capital sum is put off until the end of the mortgage term. The capital is repaid using a variety of separate savings vehicles, such as with-profits endowments, ISAs and pensions. If these savings vehicles are successful and generate extra profit, then these funds can be used to pay off capital and interest at an earlier date than that of a traditional repayment mortgage. The other advantage of this type of mortgage is that more often than not moving house will not have any effect on the savings vehicles or the repayment plan.

Of course, the risk of this type of mortgage is that the buyer is depending on the savings vehicles performing well, if this doesn’t happen a dangerous shortfall could occur.

Mix and Match mortgages

A mix and match mortgage is not designed for first time buyers, instead, this model has the interests of someone moving house in mind. As they will already have an endowment plan in place, a further policy may not be suitable for them, especially if their circumstances have changed. In this kind of instance, some mortgage lenders will be prepared to set up part of a mortgage as interest only and the other part as a traditional repayment mortgage. By doing this the money gained from the previous endowment policy.

Mix and match mortgages are popular because they are a good combination of the above mortgage plans. Keeping the security of a repayment mortgage, whilst having the investment opportunities that an interest only mortgage makes available.

The above descriptions are dramatically simplified, even the more simple mortgage plans are still quite complex, so special advice should always be sought. Dentist’s looking to buy for the first time should consider the services of an expert, like money4dentists, a specialist Independent Financial Adviser that has been assisting the dental industry for more than half a century. Using a service like this will make understanding and choosing the right mortgage much simpler. A specialist financial adviser will be able to describe the ins and outs of any mortgage plan in layman’s terms.

Using a specialist who has a good understanding of the career structure of dental professionals as well as financial and legal expertise, will mean that all advice given will be tailored to fit your individual requirements. By enlisting the services of an experienced IFA who has a background in dentistry you can be sure that when the time comes to buy, you will be making the right choices.

For more information please call 0845 345 5060, email This email address is being protected from spambots. You need JavaScript enabled to view it., or visit www.money4dentists.com