It could be argued that too much choice is a bad thing. When shopping at the local supermarket for instance, there is usually a dizzying amount of brands to choose from and knowing which item to choose over another can be confusing. Price is always a key factor in the decision making process, but understanding the ins and outs of what each product can offer can be hard work, especially when many of the items - on the surface at least - appear to offer the same thing. And this is why most people go through an initial ‘trial-and-error' period before deciding which items they like best.

But when it comes to making major financial decisions that will have repercussions for years to come, it's perhaps not such a wise idea to be so blasé about what product to go for.

In terms of mortgages, whilst having an abundance of choice is certainly a good thing, it's essential that the full ins and outs of the mortgage process is understood before committing to anything, and much of this will depend on a buyer's personal circumstances.

Indeed, the key to getting any mortgage decision right is knowing what questions to ask the lender or adviser in the first instance, as there are many different mortgage types available, from interest-only to repayment mortgages.

Then there is the issue of interest rates, and whether to go with a fixed-rate or a variable-rate mortgage. It's also important to establish exactly how long a particular rate of interest will apply for, as it's not uncommon for buyers to be reeled in by an attractive rate, only to later discover that it was only for a short period of time.

Furthermore, one of the most important questions to ask is how much the monthly payments will be at the start of the mortgage when a more competitive rate of interest is in place, compared with when the standard variable rate kicks-in later on. As this is inevitable, it's important to anticipate how much the monthly payments could potentially increase by after the initial ‘incentive' period passes, to ensure there are no nasty surprises in store.

But when making any kind of mortgage comparison, the one aspect of the application process to be really wary of, are additional ‘hidden' costs such as the arrangement fee.

Whilst these are generally payable on most mortgages, some will simply add this fee on to the mortgage debt, whilst others will demand payment up front. In this latter instance, some lenders will still keep this fee even if the mortgage application is declined, so it really is best checking this in advance to ensure the full facts are understood from the start.

So, whilst there's no doubt that choice is definitely a good thing when it comes to comparing mortgages, it does leave a lot of food for thought in terms of what is most suitable for each individual person. What's good now may not be good in 2 years time once the terms change, so it's crucial that all the right questions are asked in advance.

Disclaimer: Matthew Pressman writes for a wide variety of commercial clients. This article is intended for information purposes only and readers should seek additional information before taking any actions based on its content.

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