Mortgage Types

Looking for a mortgage can be the most daunting experience, particularly as there are numerous lenders offering thousands of different mortgages with varying methods to repay the mortgage with a wide selection of interest rates. Whether you are a first time buyer, self employed, are self-employed with accounts or self employed requiring self-certification having no accounts, looking to re-mortgage your property, have impaired credit history having missed a few mortgage / loan payments, cannot afford to buy the whole of the property so looking for Shared Ownership, have the right to buy your council house, want to buy a property to let or purchase a second property we may be able to help you.

Whatever your personal circumstances it is our primary aim to find you the right mortgage to suit your needs and during this process to keep you fully advised of the all the many different procedures involved in sourcing and securing a mortgage. You may fit into one of these categories or cross over into several so finding the right mortgage or long term solution may be proving difficult. If this is the case, then don't worry as we are here to assist you.

Standard variable rate
With a standard variable rate, the interest rate goes up and down during the lifetime of your mortgage, broadly in line with interest rates in the economy as a whole. This means that when the interest rate goes up, the amount you have to pay also goes up. When the interest rate falls, your payments come down.  When interest rates change, some lenders immediately adjust the amount they charge borrowers. Others wait until the end of their financial year before making the change. Some lenders offer a way of levelling out interest rate changes over the year. The interest rate goes up and down in exactly the same way, but your payments change only once a year.

Capped rate
A capped-rate mortgage is a variable-rate mortgage with a difference. Your mortgage rate still goes up and down, but you have the comfort of knowing that when the rate goes up it will not go over a certain figure. This is known as the 'capped rate'. Sometimes, the rate cannot fall below a minimum level, known as the 'collar'.

Fixed rate
A fixed-rate loan gives you a guaranteed rate of interest for an agreed period of time. This can be very comforting if you have a large loan or a tight budget, because it guarantees the payments won't rise. But if interest rates fall, your mortgage payments will stay the same until the end of the fixed term, so you should think carefully about how long you want to be locked into the same rate.
Most of the larger lenders will have several deals available, offering fixed rates for anything from one to ten years, or even longer. When the fixed rate period ends, the mortgage usually reverts to the lender's standard variable rate. Some lenders will guarantee to offer another fixed-rate option, usually for an arrangement fee, but can't say beforehand what the new rate will be.

Fixed rate mortgages often have early repayment charges if you want to switch to a different type of loan, or repay your mortgage during the fixed term.

It's also important to check whether you can transfer the deal and the rate to a new property if you move. Lenders usually limit any transfer to the amount you still owe on the original mortgage, so you may have to take out an additional loan to cover any increase in the mortgage amount you require. This additional loan may well be on a different interest rate to your existing mortgage.

Some deals also have early repayment charges that apply even after the fixed rate period has ended.

Discounted rate
Some lenders will offer a discount on the standard variable rate of interest.  This applies for a limited period, which the lender will decide at the start of the mortgage.  At the end of the discount period, the interest rate usually changes to the standard variable rate.

Discounted rate mortgages often have early repayment charges if you want to switch to a different type of loan, or repay your mortgage during the discounted period.

Flexible mortgages
With flexible mortgages, you can pay in extra amounts to reduce your outstanding loan or build up money you can withdraw in the future. Some mortgages allow you to vary or even stop payments for periods of time. Interest is worked out each day (or each month, in some cases) so you can see the benefits of overpayments immediately. This means you could end up saving a significant amount on your mortgage. You may even be able to pay it off early.
The flexibility of being able to stop payments for a while can also be very useful, especially, for example, when you've just had a baby or plan to renovate. Interest may be charged during the period when the payments are stopped.

Cashback feature
Some lenders offer 'cashback' mortgages where you receive a percentage of the loan shortly after completing your purchase. These deals can be very appealing; particularly to first time buyers who may need to buy carpets, furnishings and so on.

Cashback mortgages often have early repayment charges if you want to switch to a different type of loan, or repay your mortgage during a specified term. Please note that in these circumstances there may also be a requirement to repay the cashback.

Buy to let
This is a mortgage for property you want to buy and then let out, for rent. The amount you receive over and above the mortgage payment will help cover the management and maintenance costs of the property. Remember, you are responsible for making the mortgage payments even if you have not received the rent, so it's important to consider the following.

How will you repay the mortgage if the property is unoccupied for any time?
What if interest rates rise and the rental income is no longer enough to cover the payment? (Consider having a savings account where you can hold the deposit and any spare rent money)

You may have to evict your tenants. This can take time and may mean going to court.

As well as normal 'wear and tear', the property may suffer damage from tenants.
Renting out a property may also affect the income tax you pay.

Lenders will have their own special conditions, such as having a formal short term tenancy agreement and appropriate insurance.

A managing agent can deal with tenants for you and look after administration but they can be costly. Do some research before hiring one.

Many lenders will not expect your existing income to meet both commitments, but the rental income must be more than the mortgage payment (usually between 20 and 30% more) and a suitably qualified valuer may need to confirm this.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that the rental income will be sufficient to meet the cost of the mortgage.

*Some buy to let mortgages are not regulated by the Financial Services Authority. 

Self Certification / No Proof of Income - The overall cost for comparison is 7.6% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

Adverse / Poor Credit - The overall cost for comparison is 9.0% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

Right To Buy - The overall cost for comparison is 7.5% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

For more information about Buy To Let properties please call 0800 043 042 7