MORTGAGE TERM
You must decide on a 10, 15, 20, 25 or 30 year term loan. The longer your term, the less you pay each month and year. Thirty years is a long time for repayment and will cost more but the advantage is a smaller monthly repayment. A cheaper house house with a shorter mortgage term will usually have a 20 year mortgage; also the shorter the mortgage term the less interest there is to pay back and the less overall cost of your borrowing.

MORTGAGE SOURCES
Since the mid 1980's the housing finance market opened up and today you need to decide between approaching a building society; bank; life assurance company; local authority or a mortgage broker. The Building Societies are the traditional experts in mortgages; the Banks and Insurance Companies are highly competitive in their services. You need to decide what you want and compare rates and costs.

GETTING QUOTATIONS
Get several quotations but make sure you are comparing like with like; your "specification" must be similar in all cases, i.e:
"the cost over a 25 year term, for £00000, representing 80% of the house price, for a man aged 28, married, non-smoker, secured by a with-profits endowment policy". Request that any "hidden" costs, like application or acceptance fees be outlined at this point.

INTEREST RATES
The ongoing cost of borrowing money is expressed in terms of interest. Money is always expensive, sometimes more, sometimes less. When it is more expensive the Interest Rate goes up.

A.P.R.
These letters appear with quoted interest rates, an important figure as it is the actual interest rate you will have to pay. There are different methods of calculating interest and making repayments; some calculate on a daily, others on a monthly or annual basis; some include fees and charges; others charge up front; and results can vary. Repayments of the Capital Sum alter the annual picture. APR represents at attempt to unify the various methods of calculating and quoting rates. It is a calculation of the annual total interest and associated costs of a mortgage, including administrative fees, account fees and related costs, expressed as a single figure. Lenders are now under legal obligation to quote this rate on all advertising (usually in small print).

SAVINGS
Because the cost of borrowing money is so high, every penny of your savings becomes all the more valuable. If you have more than (10%) of the house-price in savings, some institutions will give you a percentage reduction on the interest charged. If you don't need to borrow more than (70-75%) of the house-price, you will not be charged a costly insurance Indemnity Bond.
Because of the Hidden Costs in buying a house you will require up to (10%) on top of the house price to cover legal, administrative, government and other financial charges. These are once-off costs but if you simply add such costs to your mortgage borrowing you are multiplying their cost threefold.
If you add the cost of fixtures and furniture to your mortgage you will still be paying for that dining room suite in 20 years time. (The one you threw out ten years ago!).

SAVINGS
There is one serious danger in saving - if your record is good you may be offered a higher sum than you originally planned and you are tempted to look seriously at prices you didn't consider before. You break under pressure, take on a higher mortgage plus additional costs and repayments which you previously had wished to avoid. It pays to save but remember the original purpose of your savings - to reduce your borrowing needs and keep that purpose in mind.

CAPITAL REDUCTIONS AND EARLY REDEMPTION
If you come into a legacy or bonus, inherit money or win the Lotto, you may decide to reduce your mortgage by paying off a portion of the capital. Will you be penalised? If yours is a fixed-rate mortgage or an endowment mortgage, the penalties could be high. Most lenders will charge you an average (approximately six months) interest payments as a break fee for the privilege of completing your mortgage in advance! Some charge a flat sum and some impose no penalty; and if you cash in your endowment policy ahead of schedule the chances are you will come out at a loss on your investment. The Building Society Law in Ireland states that:
"A member of a building society may at any time before the time agreed, repay the society the whole or any part of the loan, and is not liable to pay any redemption fee in relation to the loan or any part of the loan".

COMPETITIVE INTEREST RATES
On a mortgage of (£40,000) a difference in interest rates between one lender and another can be only (1/2%). It's worth shopping around for the smallest difference. However, a lending institution offering a cheap rate this year may be charging a higher rate next year; it's worth checking their record over the past 10 years to see if their lower rates are a temporary attraction to pull in new customers.

FIXED AND VARIABLE REPAYMENTS
Interest rates vary from month to month and from year to year. Unless you are on a Fixed interest repayment scheme these changes will be reflected in your mortgage bill. The normal system is known at Variable Interest Repayments; with this approach there is no certainty what your repayments will be next month or next year as interest rates fluctuate.
A popular option is for Fixed interest repayments. The Fixed Interest option protects you from sudden changes in interest rates from 1 to 10 years or more. However, if interest rates drop you will be left paying rates at a higher level.

BREAK AND SWITCH FEES
If you break a fixed-rate mortgage you must pay a "break fee". You will be required to make up the difference between the lender's cost of funding the loan and your own interest repayments. If you plan to sell your house within the period, then a fixed interest loan is not advisable as you will incur these penalties. Also a "Switch" fee applies if you change from a variable rate to a fixed rate mortgage, or if you move to another lending institution.

PREFERENTIAL LOANS
A preferential Loan is a loan from an employer - a bank, building society, insurance group, etc. - to an employee. Such loans offer interest rates much lower than commercial rate and low monthly repayments. Because of the financial benefits, the employee may find it difficult to change jobs. That would involve taking on market interest rates. Also, the preferential loan incurs a "taxable benefit" pr "benefit in kind" figure on the difference between the market interest rate and the preferential rate.

REPAYMENT METHODS
Mortgage payments are usually made on a monthly basis. In theory it's possible to make 2 payments a month, but this is not encouraged as the lenders accounting systems are not so flexible. One bank may offer you the option of making 10,11 or 12 annual payments, to help you budget for Christmas or annual holidays. They also facilitate fortnightly payments, i.e. 27 payments per annum.

"DEFERRED INTEREST" OR "STABILISER" MORTGAGES
These mortgages set the repayments at a percentage for the term of the loan. You pay at the chosen rate, but your mortgage account is charged at the market rate. If market rates are above the monthly payment rate, unpaid interest is paid back at a later date. If the market rates are below the set rates the borrower can build up credits with the lender. This type of loan offers the security of paying a steady rate for a fixed period, but the possibility remains of higher repayments further into the loan than with the traditional system.

THE 100% MORTGAGE
Also known as a "Higher-Multiple" Mortgage for the person(s) with few savings the 100% mortgage may be a solution to your housing needs. The interest charged is higher and you should stay within your income limits.

INCENTIVES AND PACKAGES
With increased competition from the banks and insurance companies to the mortgage market, the increased competition produced a wide range of perks and incentives to attract would-be borrowers. The customer and market have benefited to an extent, but generally what you gain on the roundabout you will lose on the swings.
Very attractive introductory interest rates to pull in customers. These represent a way of looking at and quoting a rate, but the APR, the real rate, is higher, and that only for a few years. Then you'll revert to the standard rate and the company will begin to make up for lost time and "lost" revenues. Choose a lender who is both competitive and consistent over the years. Most institutions offer quick decisions, pre-loan approval certificates and elimination of either the application fee, the acceptance fee, or both. But revenues lost here are added as charges and end up in a higher APR.
Using your own solicitor and surveyor to conduct legal or valuation work on behalf of the lender results in greater efficiency and practical savings for both borrower and lender alike. Most firms now offer mortgage finance up to (90% or even 95%) of the house price. Insurance companies offer a wide range of different endowment policies - with low start options, higher returns, etc., and should be examined closely.
Some institutions offer a moratorium on interest payments from (6 months to one year), and (6 months) on policy payments. This defers your financial costs at a time of heavy commitments, but you'll pay even more later.
Others offer free household insurance or special packages, it's probably more beneficial to get your own insurance quotes.
The banks have "loosened up" conventional procedures by offering flexible repayment schedules and the elimination of the need for bridging finance.
Some have eliminated indemnity bond fees or bank legal fees and offer special furniture loans, or "free" banking for 3 years; but these are not sufficient reasons for taking out a mortgage with a particular firm.

MORTGAGE BROKERS
A Mortgage Broker simplifies your paperwork to one application form - for the loan, the investment policy, the house and contents insurance and the protection policy. Also there is the convenience of one direct debit for all your repayments.
A reputable mortgage broker will know his/her way around the complexities of deposits, income criteria, loan terms, surveys, documentation, stamp duties, income tax relief, insurance and legal costs, procedures, etc.