How To Find The Perfect Mortgage

Buying your own home is one of the biggest decisions you can ever make in your lifetime. It entails a large investment and if you do not have enough cash to pay in full, you need to apply for a mortgage. Paying for mortgage is an additional expense, which may use up most of your take home salary. As a solution, it is important for you to find the right deal. You should compare different mortgage products, weigh all the possible options and find the best rates.

Mortgages and How They Work

A mortgage is simply a loan, wherein your property serves as collateral. When your mortgage gets approved, the bank or financial institution will loan you a maximum of 80% of the property’s value. This should be paid with interest within the agreed time table. It is in the best interest of a mortgage lender to pay in time to avoid the risk of having the property foreclosed.

Tips on Finding the Perfect Mortgage

  • Determine the amount that you can afford to borrow.Usually, a majority of mortgage lenders will let you borrow up to 4 times of your annual salary. However, this still depends on your credit standing and other existing loans. Try to compute the amount you need to pay each month using a repayment mortgage calculator and see if you can afford to pay it on time. You have to keep in mind that your property is the collateral and when you do not pay on time, the mortgage provider can take it back.
  • Work out your loan to value ratio.Your loan to value ratio is crucial to your available mortgage deals. To compute this, compare the amount you plan to borrow to the value of the property you are buying. The percentage you get is your basis for comparing mortgage deals. It would help to have more savings. You can use this to reduce the amount you want borrow.
  • Decide on your manner of payment.Choosing repayment mortgages will allow you to gradually reduce your debt since you pay part of the principal plus interest each month. In interest only mortgages, you pay only the interest so the outstanding balance remains the same. You still need to find money to pay the principal.
  • Choose the best terms.Determine the number of years you want to pay your loan. The shorter the term, the faster you will be able to clear your mortgage. However, this should also be affordable so you do not have a hard time each month.


People who plan to buy a property but do not have enough savings can opt for a mortgage. They have to remember, though, to pay on time so this will not lead to foreclosure or repossession of your property.

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