BlueFrog is an independent mortgage advisor. We can help you with all types of mortgages including first time buyer mortgages, mortgages to move home, buy-to-let mortgages and Remortgaging. There are an enormous amount of mortgages on the market, details of many are below. For a free consultation on getting a new mortgage, call us on 0207 495 6213 or send an enquiry.
With repayment mortgages, you pay back interest and capital every month. That ensures that by the end of term which is typically 25 years, you will pay back everything and own your home outright. Many repayment mortgages include an option to ‘port’ your mortgage should you choose to move. Repayment mortgages are the most popular way of paying a mortgage down.
With interest only mortgages, you only pay off the interest each month. That makes for a much lower monthly payment than a repayment mortgage. But it is important to plan how you will repay the capital at the end of the term. That might be through savings, realising investments, inheritance or selling the property at a profit.
Fixed rate mortgages allow you to know exactly how much your monthly payments will be for a set period for example 2, 3 or 5 years. So for the duration of your fix, even if interest rates increase, your payments will remain the same. It provides certainty, but if interest rates fall, you won’t benefit. When you reach the end of the fixed rate period, the lender usually puts you on their standard variable rate (SVR) which can often be high. As that time approaches, you will have the opportunity to weigh-up opting for another fix, or even remortgaging.
With Standard Variable Rate (SVR) mortgages, lenders adjust their interest rate in line with market factors including the Bank of England base rate. It’s difficult to predict what that will be, and generally the rate is less attractive than other products on the market.
With tracker mortgages, your interest payments are pegged to the Bank of England base rate. For example, if the base rate is 0.5% and you are pegged 1.5% above the base rate, your mortgage payments will be 2%. If the Bank of England base rate rises, your mortgage interest rate increases by the same amount. If it drops, it comes down by that amount, although lenders often set a rate below which it can’t fall. It is hard to predict what will happen to the bank of England base rate.
A discounted rate mortgage offers a reduction on a lender’s Standard Variable Rate (SVR). If the lender lowers its Standard Variable Rate, your payments will come down, if they increase it, you will pay more in interest. Discounted mortgages are fixed for a set period of time.
A ‘cap’ applies to variable rate mortgages. It allows you to set a top limit on your interest rate. This extra level of security is designed to reassure borrowers, but due to historically low levels of interest rates, very few lenders now offer capped mortgages.
Some lenders offer borrowers a one-off lump-sum for taking a mortgage with them. It is a marketing incentive that is particularly attractive to first time buyers who may be low on cash. It should never be the main reason for choosing a particular mortgage.
If you have savings, offset mortgages provide a great way to reduce monthly repayments. Savings are deposited into a linked account. The savings balance is deducted from the mortgage balance and the borrower only pays interest on that lower figure. Savings may be withdrawn at any time as they are needed. For example, if you have a £100,000 mortgage, and you hold £30,000 in a linked savings account, then you will only pay interest on £70,000.
Flexible mortgages provide the option to make ‘over payments’ as you can afford to, and then take payment holidays should you choose. This extra flexibility usually involves a slightly higher interest rate, but can be useful if circumstances change or you have an unexpected cost.
A buy-to-let mortgage is needed for residential property that will be let to tenants. The amount you can borrow is based on the rent that the property will generate and other considerations. Interest rates are higher than standard residential mortgages.
Many lenders offer special discounted mortgages for First time buyers. This coupled with the government’s Help to Buy scheme and stamp duty waivers give those starting out on the property ladder extra help.