|
As well as choosing the most suitable mortgage type, you will need
to be familiar with the various types of rate that are on offer
to you:
Usually known as the
Standard Variable Rate (SVR), this rate normally fluctuates in line
with the Bank of England interest rate (e.g. 1 – 2 % above
base rate). There are usually no tie-ins, or penalties for redeeming
the mortgage.
(YOUR MONTHLY PAYMENT MAY FLUCTUATE IN LINE WITH ANY CHANGES IN THE BASE RATE. EARLY REDEMPTION PENALTIES MAY APPLY)
A fixed rate remains the
same for a set period of time, regardless of changes in interest
rates. Fixed rate schemes are usually available for 2, 3, 5 or even
10 years. There are usually penalties for redeeming the mortgage
whilst in this initial fixed rate period. Once the period has ended,
the rate reverts back to the lender’s variable rate. These
schemes are usually suitable for borrowers who want the peace of
mind of knowing that their payment will not change every month.
(EARLY REPAYMENT CHARGES MAY APPLY- PLEASE ASK FOR A PERSONALISED ILLUSTRATION).
Capped rates put an upper
limit on your monthly mortgage repayments with a guarantee that
rates will not go above a set limit, but if rates reduce, then your
payment will also reduce as well.
(EARLY REPAYMENT CHARGES MAY APPLY- PLEASE ASK FOR A PERSONALISED ILLUSTRATION).
This is a variable
rate mortgage that will change as interest rates change and is therefore
capable of rising and falling over the mortgage term, but works
by offering the borrower a discount percentage below the lender’s
standard variable rate, for a period of time (usually 2 or 2 years).
(YOUR MONTHLY PAYMENT MAY FLUCTUATE IN LINE WITH ANY CHANGES IN THE BASE RATE. EARLY REDEMPTION PENALTIES MAY APPLY)
Some lenders
will often use ‘special offers’ to encourage clients
to use their products. With cash back, the lender will offer you
a sum of money on completion of the mortgage, usually a percentage
of the mortgage loan (up to 6%). However, you will usually be restricted
to the standard variable rate and the penalties for early redemption
can be substantial, as you would have to pay the cash-back, back
to the lender if the mortgage was redeemed over the early years
of the mortgage (usually 5 years). These schemes are often used
where borrowers do not have a deposit.
(YOU MAY HAVE TO PAY BACK SOME OR ALL OF THE CASHBACK ON EARLY REPAYMENT OF THE MORTGAGE)
This type of mortgage
is linked directly to the Bank of England Base
Rate (BBR), rather than the lender’s Standard Variable
Rate and as such will change as soon as BBR changes.
(YOUR MONTHLY PAYMENT MAY FLUCTUATE IN LINE WITH ANY CHANGES IN THE BASE RATE.EARLY REDEMPTION PENALTIES MAY APPLY)
|
