Guide to Mortgages

There are many different types of mortgage schemes available and below are some of the options.

If you would like some friendly, straightforward advice from one of our expert Financial Advisers then call us on 01392 453568 to arrange an appointment.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Our initial mortgage consultation is free. We will charge a fee of between £399 and £699 upon mortgage application. Depending on the amount of research and administration required.

Fixed Rate

The interest rate is fixed for a period of time. After this initial period it reverts to the lender's Standard Variable Rate.

Advantages:

Ability to budget - you know what you will be paying each month for the initial period.

Disadvantages:

Fixed only for an initial period not the whole mortgage term. If interest rates fall you could end up paying more than necessary. An arrangement fee may apply and an early repayment charge may be applied if the loan is redeemed before a specified date. 

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Discounted Rate

With a Discounted Rate Mortgage the mortgage interest rate is reduced by a specified amount for a set period.

Advantages:

When the lender's Standard Variable Rate falls so do your monthly payments and it can provide lower monthly mortgage payments at the start of the mortgage.

Disadvantages:

An arrangement fee may apply and an early repayment charge may be applied if the loan is redeemed before a specified date. Less easy to budget than with a fixed rate mortgage.

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Standard Variable Rate

This is the normal rate charged by the lender without any discounts or special deals. It can be changed by the lender in line with market conditions. This is usually the interest rate that a lender will revert to once the initial deal has finished.

Advantages:

Often no early repayment charges.

Disadvantages:

Often higher rate than fixed / tracker / discounted mortgages. 

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Offset Mortgage

An offset mortgage links your savings or your current account to your mortgage. Interest is calculated on the difference between savings and the mortgage rather than the whole mortgage amount.

Advantages:

  • Interest only charged on mortgage balance outstanding once savings balance deducted.

Disadvantages:

  • Interest rates can be higher than equivalent non offset products.

Offset

Tracker Rate

The interest rate on your mortgage moves up and down with a particular base rate, such as the Bank of England base rate.

Advantages:

When the index (for example the Bank of England base rate) falls, so will your monthly payments.

Disadvantages:

If the Bank of England rate goes up, so do your monthly payments. Often a minimum percentage is specified. An arrangement fee may apply and an early repayment charge may be applied if the loan is redeemed before a specified date. Less easy to budget for than with a fixed rate mortgage. 

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