Find yourself scratching your head over fixed rates, tracker rates, interest-only or repayment mortgages? Don’t worry, we’re here to explain!
Navigating the world of mortgages can offer plenty of food for thought, which is why it’s extremely useful to reach out for expert advice.
The multitude of mortgage options out there come with their own set of advantages and considerations, all of which can be tailored to your individual circumstances. We’re here to demystify the process, so you can decide which one is right for you…
Exploring your mortgage options
Before you decide on your mortgage, you’ll need to choose how you want to pay it each month. There are two different ways you can make your monthly payments, which we’ve listed below:
Repayment mortgage: You’ll make monthly payments that cover both the borrowed sum and the interest. At the end of your mortgage term, provided you’ve consistently made payments, you’ll be mortgage-free – the ultimate goal!
Interest-only mortgage: Your monthly payments will only cover the interest, not the capital. This results in lower payments each month, but you’ll still owe the original amount at the end of the mortgage term. You’ll need to make sure that you have a separate plan to ensure this outstanding amount can be paid off, such as investments or savings.
What types of mortgages are available?
If you opt for a repayment mortgage, you’ll need to decide whether to go for a tracker or a fixed rate mortgage.
Fixed rate mortgage: You’ll make the same monthly payment for a specified period of time, irrespective of fluctuations in the Bank of England base rate. The predictability of fixed payments offers peace of mind, as you’ll always know what you’ll be paying each month.
Tracker rate mortgage: This mortgage mirrors the fluctuations of the Bank of England base rate. This means that the interest rate that you’re charged will comprise the base rate, along with an agreed margin. As a result, your monthly payments will adjust as the base rate changes.
Other types of mortgages that are available include:
Offset mortgage: Your mortgage is connected to a savings or current account, and the funds in these accounts will be taken from your outstanding mortgage balance. The amount of interest you pay will be less, but it does mean your savings may not earn any interest.
Standard Variable Rate Mortgage (SVR): After your fixed rate mortgage term comes to an end, you’ll automatically transition to the SVR. This rate will fluctuate at the lender’s discretion, often following the Bank of England’s base rate.
Choosing the most suitable mortgage fit
Selecting a mortgage is a significant long-term commitment, so if you’re still uncertain about the right choice for your circumstances, we’re here to help.
I will assess your individual needs and identify the mortgage type that’s right for you. Get in touch with me today for a free, initial, no-obligation chat.