There are many types of mortgages available on the market and it can be confusing to know which one is right for you, so we have have outlined the basics below. To seek further advice, please contact us today.
Repayment mortgages
With this type of mortgage the mortgage repayment will be made up of part interest and part capital, which means that each month you are reducing the amount owed on your mortgage. A repayment mortgage ensures that the mortgage balance will be paid in full at the end of your agreed mortgage term, as long as your mortgage repayments are kept up to date.
Interest-only mortgages
With an Interest Only, you are only paying interest each month. This means that although your payments will be lower, the amount you borrow will still be outstanding at the end of the mortgage term. Lenders would expect a suitable repayment vehicle to run in conjunction with the mortgage to ensure that the loan can be repaid in full at the end of the mortgage term.
Exclusive mortgage deals
Some lenders offer exclusive deals that are only available to Independent Mortgage Advisers. These mortgage deals can benefit our customers by offering lower set up fees or lower interest rates. There may also be exclusive deals for First Time Buyers or buyers who hold their banking accounts with the lender.
Buy-to-Let
If you are looking to raise finance on a property that will be rented out, then you will require a Buy- to-Let mortgage. The main difference with a buy-to-let mortgage is that the lender will use the rent you receive for the property to assess affordability. Some may also take the landlord’s personal income into account.
Standard Variable Rates (SVR)
All mortgage lenders will offer a Standard Variable Rate which is a variable rate set by the mortgage lender. With this type of rate, your payments should rise and fall in line with the Bank of England bank rate changes, but not necessarily at the same time or by the same amount.
Fixed rates
With a fixed rate mortgage you will have the security of knowing that your monthly mortgage payment will not change throughout the fixed rate period. Lenders will typically offer fixed rates periods of 2, 3, 5 or 10 years.
Tracker variable rates
A Tracker variable rate mortgage will usually track the Bank of England base rate directly. When there is a change to this base rate, your mortgage rate will also change which may result in an increase or decrease to your monthly mortgage repayment.
Capped rates
With a capped rate mortgage, there will be a cap to the maximum interest rate you can pay for a set period of time. You will also benefit from any reductions in the variable rate that fall below the cap.
Discount variable rates
A Discount variable rate mortgage allows customers to benefit from a discount on the lender’s standard variable rate (SVR) for a set period. If the SVR increases or decreases then this will affect the monthly mortgage payment.
Offset flexible mortgages
With an Offset mortgage, you use any money you have in your savings and current account with the lender to help to reduce your monthly mortgage repayments or your mortgage term. You are unlikely to earn interest on your savings which are offset.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. We will not charge you a fee for mortgage advice, however you do have the option to pay a fee of up to 1% of the loan value if you prefer. Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.
