Types of mortgage available
Choosing the right sort of mortgage to meet your needs and circumstances can seem a bit overwhelming. There are many different types to choose from, all meeting the needs of different types of borrowers. Your advisor will be able to help you by explaining what’s on offer, what the key features are, and what type of mortgage best meets your individual circumstances.
Here’s a selection of what’s available in the marketplace:
Fixed rate mortgage
The interest you pay remains the same for a set period of time, so your mortgage repayments will remain the same, even if rates rise.
Variable rate mortgage
As the name suggests, the rate applied can change at any time, meaning that your monthly repayments could do so too.
Standard variable rate mortgage
The interest rate used here is the lender’s default rate, their standard variable rate (SVR). This can change at any time, meaning that your monthly repayments could go up and down.
Tracker mortgage
A type of variable rate mortgage. Here the interest rate usually tracks the Bank of England base rate at a set margin above or below it, for the period of the deal.
Discount mortgage
A type of variable rate mortgage where the interest rate is set at a discount below the lender’s SVR for a fixed period of time.
Capped-rate mortgage
The rate you will be charged moves in line with the lender’s SVR, but the cap means that the rate won’t move above a certain level.
As you can see, there are plenty of options, all designed to meet particular borrower requirements. Your adviser will also explain the fees and charges associated with each different type.
In addition, lenders package their mortgages to suit borrowers on different rungs of the housing ladder. So, for example, there are specific deals aimed at first time buyers, those who are buying property to let, or those who want to release the equity tied up in their existing property. Your advisor will be able to provide the details.
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