There are many different types of mortgage and thus when you are choosing a new mortgage, don’t just look at interest rates and fees, but consider if the mortgage is the right one for your specific needs.
Our team get to know you and put you at ease right away, you are safe in the knowledge we are the experts and we will walk you through the whole process. We help to determine what you need, then match your criteria to the lenders. At this point we consider the different types of mortgages available to meet your needs, along with the advantages and best rates available, making sure we get the best deal available on the market to you.
The best rate available to you GUARANTEED.
Types of mortgages?
- Fixed rate mortgages
- Variable rate mortgages
- Standard variable rate (SVR)
- Discount mortgages
- Tracker mortgages
- Capped rate mortgages
- Offset mortgages
So, there are many different mortgages and it’s our job to determine the right one for you. Most people have heard of fixed rate and variable rate mortgages but sometimes these are not the best option to meet your needs. A fixed rate mortgage is a mortgage where the interest you’re charged stays the same for a number of years, typically between two to five years, whereas a variable rate sees the interest fluctuate based on the Bank of England Rate. If you want peace of mind that you know what your monthly payment will be for the term of deal, then fixed rate is a great option.
Fixed rate mortgages
The interest rate for fixed rate mortgages stays the same throughout the length of the deal no matter what happens to interest rates. These are usual advertised as two-year or five-year fixed. A mortgage like this is great for budgetary purposes however they are usually slightly higher in interest rates and if interest rates fall you won’t benefit.
A Variable rate mortgage is less stable and rates can change at any time and can, if interest rates rise, leave you scrambling around for additional monthly cash to afford the premiums. Conversely, throughout the term if rates fall, you can save yourself money.
Other types of mortgages include:
This is a discount from the lender’s standard variable rate (SVR) and only applies for a certain length of time, typically two to five years.
Two banks have discount rates:
Bank A has a 2% discount off a SVR of 6% (so you’ll pay 4%)
Bank B has a 1.5% discount off a SVR of 5% (so you’ll pay 3.5%)
Though the discount is larger for Bank A, Bank B will be the cheaper option.
This could be good as rates can be lower but can again play havoc on your ability to budget.
Tracker mortgages move directly in line with another interest rate – normally the Bank of England’s base rate plus a few percent.
So if the base rate goes up by 0.5%, your rate will go up by the same amount.
Usually they have a short life, typically two to five years, though some lenders offer trackers which last for the life of your mortgage or until you switch to another deal.
Capped rate mortgages
Your rate moves in line normally with the lender’s SVR. But the cap means the rate can’t rise above a certain level. It provides certainty as long as you can pay the very top rate mortgage amount per month but beware the cap tends to be high.
This type of mortgage links your savings and current account to your mortgage so that you only pay interest on the difference. Each month you still repay your mortgage but your savings act as an overpayment which helps to clear your mortgage early.
If you are looking to discuss mortgage options and would like professional help, please get in touch using the contact form on our website.