Chances are, you’ll be needing help to finance the purchase of your home in the form of a mortgage. As a medical or dental professional, you’ll have additional circumstances and often, a unique situation to account for when searching for the right mortgage deal for you. There are a variety of options available, all depending on your financial situation, your job security, and future plans. How do you know which type of mortgage is right for you?
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Consider your monthly payments
The interest rate you’re offered by a lender will impact how much your monthly payments will be and it’s just one factor to consider when searching for a mortgage deal. You’ll also need to think about how long you want your mortgage term to be. Longer terms usually mean higher interest rates. How much of a deposit you’ve saved will also factor in. The minimum most providers want is a 5% deposit, but the more you can put down toward your new home, the better deal you can get.
Overview of the various types of mortgages
Standard Variable Rate (SVR) mortgage: With an SVR mortgage, your interest rate can go up and down over time, and as such, your monthly payments can vary. Your provider sets the variable rate you are on. While it will often follow the Bank of England base rate, it won’t always.
Fixed rate mortgage: Your interest rate is fixed for an agreed amount of time, usually 2 to 5 years, with a fixed rate mortgage. A fixed-rate mortgage provides a sense of certainty because your monthly repayments will always stay the same. At the end of your initial term, your lender will usually switch you over to an often higher SVR, so be sure to be aware of when that will be so you can look for options.
Tracker mortgage: Similar to an SVR mortgage, but a tracker mortgage will always change alongside the Bank of England base rate ( plus a margin set by the lender.) Usually, tracker rates are available for a limited period, ranging from 2 to 5 years.
Discounted rate mortgage: With a discounted rate mortgage, you get a discount off the lender’s SVR for an agreed period of time. Generally, you can get a discount for 1 to 5 years, but after that, you’ll revert to the SVR.
Capped rate mortgage: If you’d like some protection against rising interest rates, a capped rate mortgage might be right for you. A capped rate mortgage offers you a maximum interest rate for an agreed period of time. When the term ends, the rate will revert to the lender’s SVR.
Offset mortgage: Very simply, an offset mortgage lets you use your savings to offset your mortgage balance. This means you’ll only pay interest on the net amount and will need a plan to pay back the balance at the end of the term. These kinds of mortgages usually have higher interest rates.
There’s a lot of money on the line, so making the right decision is critical. Not only will the mortgage need to fit your finances now, but you’ll also need to think about any future plans you might have to ensure your mortgage still works for you for as long as you need it to.
Help with finding the right deal
With the variety and number of mortgage deals available, all with different rates, fees, and conditions, you might find yourself overwhelmed with the process. But you don’t have to go it alone, we can help you find the right mortgage based on your needs and personal circumstances – and support you through the application process. Contact Dental and Medical Financial Services to get started on your house-hunting journey.