Types Of Mortgage
There are many types of mortgages available on the market and because it can be confusing to know which one is right for you, we have outlined the basics below. For further advice from one of our qualified mortgage advisers, contact us today.
Repayment mortgagesWith this type of mortgage, monthly payments are made up of a payment against the amount being borrowed as well as payment of the interest being charged on the amount borrowed. In the earlier years of the mortgage, the greater part of the monthly repayment is made up of interest. However, towards the latter part of the mortgage term, the situation is reversed and the majority of the monthly payment will be deducted from the capital amount borrowed.
Interest-only mortgagesChoosing an interest-only mortgages means only paying off the interest on the money borrowed. Therefore monthly payments will be lower, but the whole of the amount borrowed will still be outstanding at the end of the mortgage term. In this scenario the borrower must put in place arrangements for paying off the capital amount borrowed at the end of the term.
Fixed ratesFixed rate mortgages offer the borrower the reassurance of knowing that monthly payments will not change from month to month. With this type of mortgage, the borrower is offered a fixed rate of interest for a set period of time – typically two, three or five years.
Discount variable ratesDiscounted variable rate allow the borrower to benefit from a discount on the lender’s standard variable rate. As the lender’s standard variable rate (SVR) increases or decreases, so does the mortgage payment.
Tracker variable ratesTracker variable rates are usually linked to the Bank of England bank rate, and payments will change in line with the Bank of England base rate.
Standard Variable RatesChoosing a standard variable rate means that payments will 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.
Buy to Let and Holiday homesWhen considering the purchase of a Buy to Let or Holiday Home, there various mortgage options. This is becoming a specialist market sector. The lenders will use the rent that could reasonably be achieved to assess affordability. Some lenders may also take the landlord’s personal income into consideration. See our guide
Offset mortgagesTypically, a current account, savings account, or both, are linked to the mortgage. The amount in the linked account(s) is offset against the outstanding mortgage and the interest charged adjusted for that month.
Exclusive dealsAs a company, we have access to a range of exclusive deals, some of which are only available to our customers. Our expert mortgage advisers are able to advise clients on the latest deals available and whether they are appropriate for their personal circumstances. To seek further advice from one of our qualified mortgage advisers, contact us today. Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £395.
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