Mortgages - Advantages and Disadvantages 

The advantages and disadvantages of having a mortgage

Having your own home is a goal for many people in the UK. Yet, in order to buy a house, most of us will have to take out a mortgage. It's either that or having the prospect of staying in rented accommodation for the foreseeable future. Taking out a mortgage is a major life decision and one that should only be taken after much consideration. Here are some pros and cons to help make up your mind regarding taking out a mortgage.

Advantages

• Longer-term mortgages – With the average house price in the UK currently £223,257, a mortgage is the only way for most people to own their own home. However, longer-term mortgages are becoming available. These 30-year mortgages mean although it's a longer commitment, it can be a more affordable option than before.
• Cost-effective borrowing – The interest rates on a mortgage are generally lower than for other types of borrowing. Lenders can offer a variety of mortgages such as fixed-rate, tracker or discounted deals. It's possible to find a specific mortgage deal that's ideal for your circumstances and also make it an affordable option.
• Help to Buy – The government has introduced a number of initiatives in recent years designed to make taking out a mortgage more affordable. Shared ownership, for example, can make buying a home a viable option even in more expensive areas.
• Easy to repay - The mortgage is repaid little by little on a monthly basis, and depending on the interest rate, your monthly repayments could well be much lower than the rent you would pay in your area.

Disadvantages

• Debt – By taking out a mortgage, you're taking on a commitment to pay back a lot of money within a certain time period, including interest. Even over 25 years, you'll be paying a lot more back than you borrowed.
• Secured Loan – A mortgage is a secured loan against your property so if you can't keep up with repayments, you could end up losing your home.
• Various fees – In addition to the interest you pay, there can be a surprising amount of other fees to pay, including valuation fees, remortgaging fees and conveyancing costs.
• Interest rates on mortgages are constantly changing and can increase – This could be an advantage, because they can also decrease, but it could mean you end up paying more than you expected.
• Repossession - If homeowners can’t make the repayments, their home will be repossessed. If you are unable to keep up the monthly payments on your home, you must speak to your lender as soon as possible. They may be able to find a way to help you, or you run the risk of losing your home.
• Overall repayments - The monthly amount you’re paying may seem reasonable, but once you factor in the interest, the total amount you pay back over the years is huge.
• The value of your property may decrease as the market fluctuates – You can never know for certain if the value of your property will increase, and you may find that you lose money on the property if you choose to sell.

There are different types of mortgages available, including repayment, fixed-rate, tracker and interest-only, so you can find something that suits you. With government incentives such as Help to Buy and