Mortgages

Types of Mortgages

Fixed Rate Mortgage

This option offers an interest rate that is fixed for an initial period. Typically rates will be fixed for two, three or five years, although other terms are sometimes available. Fixed rate mortgages offer security of payment without the need to worry about fluctuating interest rates, however, you should remember that whilst you will be protected against any increases you will not benefit should interest rates fall.

Generally you can expect to be tied to a lender during the period of the fixed rate and penalties would apply if you were to repay the mortgage during this time although most fixed rates are portable, which means that if you wish to move home you can take the mortgage with you thereby avoiding any early repayment charges.

If you would like more information please contact us.

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Capped Rate Mortgage

This is a mortgage that is guaranteed not to rise above a specific rate (the ‘cap’) within a set period. This means that if interest rates rise your mortgage payments cannot go above the ‘capped’ level. However, if rates fall below the capped level your payments will reduce accordingly.

There are often early repayment charges applicable if the loan is repaid within the capped period, however, as with fixed rate mortgages most lenders’ products are portable. Capped rates are not generally as widely available as fixed rates and are often more expensive.

If you would like more information please contact us.

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Tracker Rate Mortgage

This is a variable mortgage that ‘tracks’ the Bank of England’s base rate by a set percentage within a set period. Therefore if rates rise your mortgage payments will increase, whereas should rates go down so will your payments.

Unlike the fixed and capped rates tracker mortgages offer no security of payment as your monthly cost will fluctuate in line with underlying interest rates. There are often early repayment charges applicable if the loan is repaid within the initial period whilst the rate is low. As with the fixed and capped rates outlined above most of these mortgages are portable.

If you would like more information please contact us.

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Discounted Rate Mortgage

This is a variable mortgage that is discounted from a Lender’s Standard Variable Rate by a set percentage within a set period. If the lender increases their rate of interest your payments will also increase, but should they lower their rate your payments reduce accordingly.

They are very similar to Tracker mortgages, however they are linked to the lenders Standard Variable Rate rather than the Bank of England’s Base Rate. As with tracker rates discounted mortgages offer no security of payment as your monthly cost will fluctuate in line with underlying interest rates.

There are often repayment charges applicable if the loan is repaid within the discounted period, but as with the mortgages mentioned above most lenders’ products are portable.

If you would like more information please contact us.

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Standard Variable Rate Mortgage

The standard variable rate is determined entirely at each Lender’s discretion and is the rate you can expect to pay at the end of any special offer period, such as a Fixed, Capped, Discounted or Tracker rate.

If you would like more information please contact us.

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