If choosing the right mortgage type is making your head hurt, then don’t worry, you’re not the only one.
With so many different types of mortgages available to choose from, it can be confusing knowing which is the right one for you and your circumstance. That's why our Resi Finance team have put together this essential guide, to help you stay ahead of the mortgage jargon.
From fixed rate and tracker rate to interest-only, there is a wide range of mortgage types to choose from. Each has its own advantages and disadvantages, but all too often the jargon you encounter makes it difficult to understand the difference - or have an idea of which might be right for you. Fortunately, we're here to explain all the different types of mortgage in the most straightforward way possible.
Every month you will pay back some of the money you borrowed, as well as the interest. At the end of your mortgage term, assuming you have met all the mortgage payments, you will have paid off your mortgage in full.
You only pay the interest each month, not the capital. This means your payments will be lower but the overall amount you borrowed will still be outstanding at the end of the mortgage term. If you choose this mortgage then you need to have credible arrangements to pay off the mortgage.
You will always pay the same amount every month. You’ll pay the same interest rate regardless of what happens to the Bank of England bank rate, for a set period of time e.g. two, three or five years. This can give you peace of mind that you’ll always know what to expect your mortgage payments to be.
This type of mortgage tracks the Bank of England bank rate, so your mortgage repayments will change to follow this.
Your mortgage is linked to a savings account or perhaps a current account. The amount you have in these accounts will be offset against your outstanding mortgage amount. You’re unlikely to earn interest on your savings which are offset.
Once your fixed rate has come to an end, you will fall onto a standard variable rate. These payments will rise and fall at the lender’s discretion but traditionally will track the Bank of England bank rate.
Our mortgage advisers will listen to your needs, understand your circumstances and help find the right mortgage for you. Your initial appointment with us is free, so please don’t hesitate to get in touch for further mortgage advice.