The Many Financial Instruments a Mortgage Advisor in Sheffield Can Help With
Your family's financial success is closely linked to the economic decisions you make when searching for a mortgage suitable for your requirements. Are you, for example, a young family looking to buy the first home of your life? Then you may want to take advantage of the first homes scheme the UK government offers. Are you instead an experienced entrepreneur looking to invest in a second home to rent at a favourable rate? Then you'll probably be interested in a buy-to-let mortgage. But no matter what your financial situation, one thing is sure, to save significant amounts of money, primarily if you are based in South Yorkshire, you will need to call on a mortgage advisor in Sheffield.
A professional mortgage counsellor could give you the specialised help you and your family need to achieve economic prosperity. Such an expert will have access to the databases of the major UK lenders, will be able to work with you to find the most suitable financing tools for your requirements, will be able to handle the application process for your file, and last but not least, could negotiate on your behalf to obtain a lower interest rate. But you probably have questions, and we are eager to answer them. So, in the next few minutes, we'll look at the pros and cons of ARMs and fixed-rate mortgages, present why an equity release mortgage might be a good idea, and look at ways you can get a buy-to-let loan.
Fixed-Rate or ARMs?
Sheffield is a small city when it comes to population. However, the housing market here is dynamic, and people interested in buying a property must use all the financial tools available
to get a home loan on favourable terms. If you have experience applying to different lenders, you probably know that your mortgage options will usually fall into two categories. Loans with a fixed interest rate and loans with adjustable-rate. But what are the differences between them, and which are more advantageous?
Fixed-rate mortgages are the most popular option and perhaps the most stable financial investment that a mortgage advisor in Sheffield could recommend. In such a mortgage, the loan's interest rate remains constant for a predefined period, so you will always know what amount you will have to pay at the end of the month. If the national interest rate increases significantly, your rate will remain constant, but the opposite is also true. Fixed-rate mortgages start from the get-go with a higher interest rate than their ARM counterparts, and their flexibility is lower.
On the other hand, adjustable-rate mortgages often come with a lower interest rate, which market movements can influence. Currently, the interest rate offered by the Bank of England is set at 4.5%, but recent years have been characterised by increased volatility, making this financial instrument a somewhat risky investment. ARMs are more flexible, and your monthly rate may fall depending on market conditions. However, in the event of significant changes in the national economy, the opposite can also be true, with the risk of payment shock. Because of this, ARMs are significantly less popular than fixed-rate mortgages, with only 25% of borrowers choosing this option.
Should I Choose an Equity-Release Mortgage?
The British housing market is characterised by high volatility, so equity-release mortgages make sense for many citizens over fifty-five. What is this type of mortgage? In short, it is a way for you to unlock some of the money tied up in the value of your house. Unlike other
types of home loans, you will not make a monthly payment with equity-release mortgages. Instead, the amount you receive is repaid to the lender when you sell the property. In simpler terms, you can obtain money in exchange for surrendering rights to your household's inheritance once you either pass away or move into a retirement home.
As a professional mortgage advisor would tell you, such a loan can be advantageous if you want to obtain a significant sum immediately. The money you receive could be spent on a vacation, a home renovation, paying your grandchildren's school fees, or investing in the stock market. But this type of loan has its drawbacks. For one, you will reduce your children's inheritance, and the loan must be repaid if you want to sell your home. Then you must consider that an equity-release mortgage is a long-term commitment, which will not be economically advantageous if you want to end the loan early.
What about a Buy-to-let Mortgage?
If you want to invest in your family's financial future, you will probably be interested in a buy-to-let mortgage. These are a type of home loan offered strictly to purchase a secondary dwelling that will be rented out for at least 90% of the year. A buy-to-let mortgage can be beneficial if you are interested in obtaining steady rental income and if you want to diversify your investment portfolio. The house purchased with this loan will most likely not lose its value, so you will get a significant profit in case of a listing on the market. Moreover, the expenses associated with the maintenance process of the secondary dwelling may be exempt from taxes, which can contribute decisively to your family's financial stability.
However, this type of loan is more difficult to obtain because it represents a more significant risk for lenders. A buy-to-let mortgage will require an initial deposit of between 20 and 40% of the property's market value, and lenders will, in many cases, request a feasibility study showing the expected quarterly earnings of the property. The monthly rate of a buy-to-let mortgage will be higher than in the case of a first-home loan, as will the interest rate. Moreover, this type of loan might not be possible if you are a first-time house buyer, as the risk for lenders is considered too high in this case. However, a mortgage counsellor could handle your case and find a solution, and if you want to find out more, you can access Sheffieldmoneyman.
You Need the Expertise of Specialists in this Domain
Enlisting the professional services of an established mortgage advisor based in Sheffield can be one of the most inspiring financial decisions you can make. Perhaps you are a young family and would like to enquire about the terms and conditions under which you can get help from the UK government, or maybe you have questions about the types of mortgages that are right for you if you want to benefit from a rental income. Either way, a professional mortgage counsellor may be just what you need.
Mortgage counsellors are experienced professionals who can handle your application process, advise you on the best financial instruments for your use cases, and compare the mortgage offers available in the UK market. A professional mortgage counsellor can be an ally that will look after your family's financial future, and the help they offer could be vital in giving you the resources you need to make the right decision about your next home loan.