Buying a home is likely to be the biggest purchase you’ll ever make and a mortgage will be your largest debt. Because you can spread the repayments on your home loan over so many years, the amount you’ll pay back every month is more manageable, and affordable!

Advantages of a mortgage. 

Is a cost-effective way of borrowing:

Interest rates on mortgages tend to be lower than any other form of borrowing because the loan is secured against your property.  This means the bank or building society has the security that if it all goes wrong and you can’t repay it there is still something valuable, your property, to sell to pay back some, if not all, of the mortgage. 

Interest rates on mortgages are constantly changing – over the years they’ve been higher than 15% and lower than 2%.  Fixed rate and tracker mortgages tend to be the most popular, but there are also discount and offset mortgages, plus products aimed at first time buyers and landlords. 

Disadvantages of a mortgage. 

You’ll pay back a lot more than you originally borrowed:

The most obvious disadvantage is that you are carrying an enormous debt over a long time.  The other major drawback is that since the mortgage is secured on your property, you have to be able to keep up with your mortgage repayments or you could lose your home.

During the credit crunch, lenders worked hard at keeping even those struggling with the mortgage in their home.  But if homeowners really can’t make the repayments, their home will be repossessed.  The bank or building society will then sell it to recover their money.

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