• One of the main problems about mortgages at present is that not only are there so many different styles but also new concepts and twists are being introduced on an almost monthly basis

• Some mortgage packages are also only available for a short period of time

• So the good looking deal that you were looking at six months ago may not be now available

• But there are steps that can be done to simply evaluate the different mortgages available today

1. Look at Costs

• The Annual Percentage Rate (APR) is the most important and informative figure because it is a standardised calculation that all finance companies have to use

• APR takes into account the amount of interest charged and when it must be paid

• But APR does have its weaknesses

• Notably it assumes that interest rates will remain at current levels as well as the mortgage lasting for the full term, say 25 years

• If interest rates do change especially significantly over time and/or you repay part or all of your mortgage early then the APR will change and can do so dramatically

The table below gives a rough estimate of what the monthly mortgage payments will be (per every £25,000 in borrowings) in relation to the APR and duration, 10 years, 20 years etc.

2. Look Into Early Repayment Penalties

• Penalties in the form of a cash payment can result if you decide to repay part or all of your mortgage early
• Perhaps a relative dies leaving you money and you want to reduce your mortgage
• These are especially prevalent with 'special offer' mortgages such as a mortgage that comes with a discounted interest rate for a set period of time
• You really want to have the most flexible terms possible towards your mortgage
• You never know what can or will happen to your financial situation over the years

3. Special Offers Mortgages

• There are some fantastic mortgage deals in the market at present
• But always study the small print carefully as you may find the initial advantages are negated if you want to cancel the mortgage within a certain period of time (perhaps you want to switch to another Banks etc)
• Some examples of special offers include such things as cashback (to help you furnish or redecorate your new property), free legal fees and valuations etc

4. Flexibility

• Flexibility is one of the most critical components of a modern mortgage
• It's all very well to get the most amazing deal today for your present financial situation
• But what happens in 3-5 years time when you financial situation changes?
• That maybe no time to find that your mortgage has a myriad of different penalties such as making a lump sum payment
• You really want to try and strike a firm balance between a great deal and a lot of flexibility
• Realise that a mortgage is nothing more than a very long term loan and a lot of change is possible to your personal and financial situation over a period of 10-20 years

5. Other Fees

• These may not be apparent at first but sometime in order to qualify for a certain mortgage you'll also have to sign up for an insurance package or other types of one off fees
• Perhaps this is one area where either a CAT certified mortgage or employing a mortgage broker is an advantage
• Another fee you should look out for especially if you're looking to borrow a large percentage of the property's value (usually over 75%) is a mortgage indemnity guarantee
• This extra payment which can run to over £1000 covers the lender against any loss on selling your property if you fail to keep up your mortgage payments