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Please see below some examples of mortgages - the table below is powered by MyMortgageKey and all queries will be passed to their network of qualified advisers.
Mortgage Information
Mortgages are different from other types of loans because
they are for larger amounts and are normally borrowed for
a longer period (the mortgage term), typically 25 years.
Mortgages are secured on your property, this means that, if
you don’t keep up the monthly mortgage payments, the
mortgage lender could take back or repossess your home and
sell it to try to recover the money you owe them.
Types of mortgages:
Fixed rates
Fixed rates give you certainty about your payments
over a specified time as the interest rate is fixed. Most
of the fixed rate deals set the interest rate for two to five
years but you can face a heavy penalty, typically six months'
interest, if you exit early. Fixed mortgages also generally
cost more than other types and you are still taking a risk
because this product takes a call on future interest rates.
Variable rates
Variable mortgages are available in a variety of guises. They
may take the form of a base rate tracker which follows the
Bank of England's interest rate. The interest you pay might,
for example, be the base rate plus 0.8% for the length of
the mortgage, the Bank of England makes a decision each month
on where to set interest rates so your mortgage moves in line
with this. A discount tracker is a variation which may give
you a rate of base rate minus 0.4% for two years and then
base rate plus 1% for the rest of the term. This is the most
cost effective type of mortgage but if you go for a discounted
product you are going to have to keep switching to new deals
to get the best value.
Capped rates
When interest rates are rising, as they are now, a capped
rate may be the solution for homebuyers seeking a security
compromise. These mortgages set a ceiling on how much you
pay, but will allow the rate to fall again after interest
rates peak. One recent offering gave a 1.2% discount on the
lender's standard variable rate of 6.34% so you paid 5.14%.
But the rate was capped at 5.59% so you will never pay more
than that. If interest rates drop in the next two years the
rate on this product will also fall.
Flexible mortgages
Flexible mortgages allow you to overpay or underpay and partly
redeem your mortgage without penalty, with interest charged
on a daily basis. All the products mentioned so far are available
on a flexible basis, remember that these bells and whistles
add to the cost and you end up paying for it somewhere.
Current account mortgages or Offset Mortgages
These are a version of flexible mortgages and the concept
is simple: Why have a mortgage costing 5.0% interest plus
a savings account earning 3.0% when, by offsetting savings
against the outstanding mortgage capital, you can save interest
at the rate chargeable on the mortgage for the amount by which
the savings reduce the capital? In current account mortgages
this is all achieved within one account and when savings are
credited the balance falls by the amount of savings. Interest
is only charged on the current balance of the account. With
offset mortgages, mortgages and savings are separate accounts
but the savings account earns no interest, instead, the credit
value of savings is offset against the outstanding mortgage
capital and interest rate payable reduced accordingly.
Interest only or repayment Mortgages
Interest only mortgages require the buyer to find a lump sum
to cover the original sum borrowed, regular savings plans
are used to build up this lump sum. Repayment loans gradually
pay back the loan and the interest so that at the end of the
mortgage term everything is paid off.
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