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 Mortgages

Mortgage Types

The following is to give you an idea of the different types of product you could obtain. Due to current lending  policies  there are so many options, we strongly advise that you speak with one of our advisers to assess your circumstances and see what is and is not relevant for you and your circumstances.

Repayment Mortgage

With a repayment mortgage, you make monthly payments that cover both the interest on the loan and the repayment of the capital itself. This type of mortgage guarantees your loan will be paid off in full at the end of the term; as long as the required monthly payments are maintained throughout.

Interest Only Mortgage

With an interest-only mortgage you pay only the interest on the loan. You do not pay off any of the outstanding debt until the end of the term.  It is your responsibility to ensure that you have sufficient funds to repay the full capital amount at the end of the agreed mortgage period.

Combined Mortgage / Part and Part

With a combined mortgage, a proportion of the loan is treated as an interest-only mortgage and the remainder as a repayment mortgage. Therefore, you will use both repayment and interest-only methods to repay the loan.

Standard Variable Rate Mortgage

A standard variable rate (SVR) mortgage is based on the lender’s basic mortgage rate. This is usually the rate to which you will revert once a discount or other incentive period ends, which rises and falls in response to changes in the Bank of England (BOE) base rate.

Fixed Rate Mortgage

A fixed rate mortgage enables you to know exactly what your monthly payments will be for a predetermined period of time, regardless of any movements in the BOE base rate.  Once the fixed time period expires, your mortgage repayments usually switch to the mortgage lender's standard variable rate.

Tracker Rate Mortgage

A tracker rate mortgage rises and falls in line with the base rate set by the Bank of England (BOE).  The tracker mortgage rate is usually set at a standard percentage slightly higher than the BOE base rate for a set period of time. Generally the rate is lower than the lender’s SVR product.

Capped Rate Mortgage

As it suggests, a capped rate mortgage places an upper limit on the interest rate that the lender can charge. As a borrower, you have the security of a ‘ceiling’ to the amount that the lender can increase your mortgage interest rate.  The capped interest rate period is for a specified duration, usually between one and five years. At the end of this period, the mortgage will usually revert to the lender's Standard Variable Rate (SVR).

Discount Rate Mortgage

This type of mortgage rises and falls in response to movements in the lender’s standard variable rate (SVR). However, the amount payable will be a fixed percentage less than this SVR during the discount period.  First time buyers tend to favour discount rate mortgages as their initial income may be stretched but they expect to have salary increases in the future.