Types Of Mortgage
Repayment (Capital & Interest)
This is the most common type of mortgage as it provides a guarantee that so long as all payments are met within the term the mortgage will be repaid. The monthly repayment consists of Capital and interest payments throughout the term resulting in a reduction of the outstanding debt every year, however’ I the early years the payments are mainly made up of interest and therefore the outstanding debt reduces slowly in the early years.
With this option you only make monthly payments to cover the interest on the loan and at the end of the term the outstanding debt remains the same. You are normally required to take out a separate investment policy that is designed to be sufficient to repay the debt at the end of the term. This option therefore has not guarantee on the repayment of the loan at the end of the term.
Standard variable rate:
This rate is a rate dictated by the provider and is normally up to 4% higher than the Bank of England’s base rate. This rate normally provides you with the freedom to move your mortgage around the market without any penalties. This rate also normally applies at the end of an initial introductory rate. This rate will fluctuate up and down in line with the market conditions.
Similar to the Standard variable rate in that the rate will fluctuate with the market conditions but you are provided with a reduction on the standard variable rate for a specified time. At the end of the discounted rate you would normally revert to the lenders Standard Variable Rate.
This rate will follow the fluctuations in the market as it is designed to follow the Bank of England’s base rate by a specified amount. This again provides no protection against increases in the market but provides a good all round costing mortgage for those who are happy to take risks within the changing market. They also normally have early repayment charges within the tracker rate period and at the end of the discounted rate you would normally revert to the lenders Standard Variable Rate.
This rate provides security of your monthly payment regardless of the market fluctuations for a specific period. This allows you the ability to budget for a period of time however these normally have high early repayment charges so you need t be certain these are suitable for the foreseeable future. At the end of the specified fixed rate you would normally revert to the lenders Standard Variable Rate.
Similar to the fixed rate above but have a ceiling rate and you will pay the lower of the Capped rate or Lenders Standard Variable rate This again provides you with the stability of a specified maximum payment but with the added
protection that if the rate were we reduce you would benefit from this as well.
For mortgage services you can choose how we are paid, we will charge you an administration fee starting from £400 on instruction and receive commission from the lender, or you can pay a fee of 2% and we will receive no commission from the lender.
Your home may be repossessed if you do not keep up your repayments on your mortgage.