Mortgage Schemes
Types of Mortgage Scheme
So having decided on your repayment method, you now need to look at the various schemes available, and which is best suited to your personal needs:
VARIABLE MORTGAGES- interest rates varies in accordance with the lenders standard variable rate.
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FIXED RATE MORTGAGES- interest rate frozen at a specific rate for a period of between 1 - 10 years, sometimes longer. Usually the longer the fixed rate period, the higher the interest rate.
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DISCOUNTED MORTGAGES- standard variable rate, discounted by specified percentage but still rises and falls along with any changes, again available for 1 - 5 years usually. The longer the discounted period, the lower the discount. If there is an interest rate rise or fall, the lender usually will change your repayment rate around 1 - 2 months later.
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TRACKER MORTGAGES- A tracker mortgage gives you the important benefit of paying a rate that follows an independent interest rate throughout the tracker period. A tracker mortgage rate follows the Bank of England base rate (also called the repo rate). The Bank of England base rate is variable, so the interest rate you pay may increase or decrease during the tracker period.
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CAPPED MORTGAGES- a standard variable rate scheme, where during the capped rate period the interest rate cannot rise above a certain rate, although you can potentially benefit if interest rates fall.
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CASHBACK MORTGAGES- usually in association with standard variable mortgages, cashbacks are incentives to borrowers in need of extra capital.
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OFFSET MORTGAGES- this type of mortgage combines your current account, savings accounts and mortgage within one arrangement. The mortgage element can still be interest only or repayment, but any savings held are taken into account by the lender when calculating repayments, and in certain circumstances the overall amount of interest charged over the term of the loan can be lower.
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LIFETIME MORTGAGES- a way of releasing capital from your property without necessarily having to make monthly repayments. Only available to mature homeowners with appropriate equity available in their property. Professional mortgage and legal advice is essential for anyone considering this option. This is a Lifetime Mortgage. To understand the features and risks, ask for a personalised illustration.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
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