So you want a mortgage?

Required Reading


  


The Best Way to Fund Your Next Car

With new car sales currently booming, it's tempting to take advantage of the deals on offer. But a car is one of the most expensive purchases you'll ever make, and many people end up paying too much because they don't choose the right method of finance.

Let's take a look at the pros and cons of some of the most popular car financing methods.

Cash

If you can afford it, the easiest way of buying a car is with cash. Interest rates on savings are at record lows so your money won't be earning much in the bank. You may, therefore, take the view that it's better to spend it. Don't overreach yourself, however; if you do take this route, remember that you need to leave yourself some money in hand for running costs.

Loans

A popular way of financing a car purchase is to take out a loan. This may be in the form of a personal loan from your bank or a loan arranged by the dealer with a finance company. In either case you will own the car after you've made the final payment.

At standard rates high street loans are usually cheaper than those arranged via a dealership. However, it's worth looking out for special deals from dealers that offer zero percent or low rates, although you'll usually need to put down a higher deposit to qualify for these loans.

It's also worth checking out the new generation of peer-to-peer loan providers; if you have a good credit history, you may be able to get a lower rate.

Hire Purchase

Traditionally a popular way of buying a car, hire purchase involves putting down a small deposit and signing up to a monthly payment plan. The way this differs from a personal loan is that you have the opportunity to review the plan once half the value of the car is paid off. At this point, you can either continue the payments until you own the car or hand it back. If you opt to return the car, though, you'll be liable to pay for any damage.

The advantage of hire purchase is that the monthly payments are often lower than with a loan. The disadvantage is that there may be mileage limits, so you need to check the small print carefully.

Credit Cards

An increasing number of people simply swipe their credit card when it comes to buying a car. This can be a good way of doing the deal if you have an introductory low interest offer and can pay the card off before this ends.

At normal rates, though, a credit card is a more expensive way of borrowing than a loan. You also need to be aware that some dealers will impose a surcharge for paying by credit card so you'll end up paying an extra couple of percent.

Personal Contract Plans

A personal contract plan is like a loan in reverse. Instead of paying a deposit and then making monthly payments, a PCP means that you make regular payments over two or three years, and you then have the option to make a final lump-sum payment to buy the car.

If you choose not to make this payment, of course, you need to hand the car back at the end of the plan. The main disadvantage of PCP is that the price is usually fixed, so you don't have the opportunity to negotiate for a better deal.

Leasing

Leasing a car is similar to taking out a PCP with the difference that you don't own the car at the end of the contract. It's effectively hiring a car over an extended period, typically two to four years, rather than buying it.

Payments are generally lower with leasing because you're only paying for the difference between the value of the car when new and its value at the end of the contract. Because the car is owned by the leasing company, you'll also find that tax and maintenance are included in the deal, so it's easier to budget for and control your motoring costs.

The downside of leasing is that there's usually a mileage limit, you'll need to estimate your annual mileage at the start of the plan and extra charges may apply if you exceed this. You may also incur extra charges if the car has suffered excessive wear and tear at the end of the plan.

Whichever method you choose to pay for your car, it's crucial to take account, not just of the price of the car and of the monthly payments, but of how much you'll be paying back in total. That way you can compare the different options and work out which one is going to be best for you.

A big thank you to Louis Rix, Co-Founder and Director of Carfinance247.co.uk for writing this informative guide for us.

 

Nearing the end of the mortgage term


It may not seem like it now, but one of these days you're going to get near the end of your mortgage term. If you have chosen a repayment mortgage, it's worth remembering that the effective net rate of interest rises markedly in the last couple of years and so it will be in your interest to pay it off early.

When you do so, however, ask your building society manager if you can leave a nominal sum -110 or so That way, you can continue to have the deeds stored at their expense, not yours, and it will make the way easier should you ever wish to go back for a...: Nearing the end of the mortgage term


Current Mortgage Offers

  • At Commercialise Yourself you can compare mortgages using our repayment calculator, look for special offers for first time buyers or for 95% loan to value mortgages and see the most popular choices, Nationwide, Accord etc, we now even have a buy to let section for the brave or heart or strong of pocket! You can send us an email if you want to know more about mortgages and what we do and we will get back to you as soon as we are able. offers@commercialise.org.uk