There is a wide range of mortgages to suit a plethora of needs. It can be a minefield trying to figure out which one best suits you. Typically a your current circumstances, your wants & need and the interest rates options are all considered. Here we discuss some of the more popular options available on mortgage products:
A Fixed Rate Mortgage is one of the most popular as you will know the exact amount to pay every month. The interest rate is fixed and thus so is your monthly repayment amount. The term is typically agreed around 2 – 5 years but some can go up to 10 years or even more.
The advantage of a fixed rate mortgage is that it is unaffected by an interest rate increase, although the downside is that you won’t benefit if interest rates fall.
Remortgaging entails changing your current mortgage to a different provider or product, offering alternative terms, but without selling or moving home. Typically this is to take advantage of reduced interest rates which reduce your monthly mortgage payments, but in some circumstances the mortgage amount can actually be increased to raise additional funds, secured against your property, for a number of reasons such as home improvements or debt consolidation.
Whilst buying your first home can be exciting, finding a mortgage can be a somewhat daunting prospect, due to the plethora of different products and offers out there. It can be tricky to decide which rate, lender and product is the ideal one for you, but we can take much of the stress away from you by making the process simple & stress free. Being a first time buyer can actually be an advantage as there are many exclusive rates & mortgage products available.
Your credit rating may be low or have issues, whether historic or recent, but this doesn’t have to block you from accessing a mortgage, albeit you may have to find a larger deposit and / or pay higher interest rates.
We have a team of experienced advisers who specialise in these situations who can advise you and guide you through the process.
For those who only have 5% deposit to place down on a home, the 95% mortgage is an option. Ideally suited to those who can afford the repayments but just don’t have access to a greater deposit. These mortgages tend to compensate the lower amount of equity in the property by setting higher interest rates.
These mortgages are variations of a variable rate mortgage; for example a tracker mortgage will follow, or track, a set interest rate, typically Bank of England’s base rate. It does not match it exactly, but may be a set amount above (or sometimes below) the Bank’s base rate so rises & falls proportionally inline with the interest rates.
Additional investment properties are often purchased using a Buy To Let mortgage, where the aim is additional income from rent and / or the capital growth of the property. They will typically attract a minimum deposit of 20 – 25% of the value of the property and tend to have higher interest rates.
From 1st April 2016 there are further implications of the added stamp duty on additional properties.
Buy to Let Mortgages are not regulated by the Financial Conduct Authority
An offset mortgage uses your savings to be offset against the outstanding amount, thus reducing your payments. So you may have a £250,000 mortgage and pay interest on the entire amount, but offsetting your savings of say £20,000 means you would only pay interest on £230,000. The interest rates on Offset mortgages tend to be higher but certainly worth considering if you have a decent amount of savings.
A Flexible Mortgage will calculate your balance daily, in terms of your capital & interest. The advantage of this is being able to overpay if you have spare funds, thus seeing your repayments reduce down immediately but also the flexibility to underpay when cash is tight, albeit increasing the total interest in the long term.
Some products also allow you repayment holidays, subject to there being a reserve amount of money in your account. Unpaid interest will simply be added to the outstanding mortgages whilst overpayments will reduce it. Some products also provide a facility where you can draw down additional funds, up to an agreed limit.
If you’re building your own house, a Self-Build Mortgage is well worth considering. As the build progresses, money is released as each stage is reached. Some lenders provide funds to purchase the land, normally 75% of the value or purchase price, then further funds are released as the build reaches either agreed or flexible stages. The stages depend on the lender. There are two ways a self-build mortgage can release funds;
Arrears Stage Payment
Funds are released at the end of each stage, after a valuer has attended the build and is happy that the agreed stage has been completed. The disadvantage is that this method can cause cash flow problems for self-builders.
Advance Stage Payment
Funds are released at the start of each stage, the opposite to the arrears payment scheme, prior to building work commencing. This tends to be the more popular option for builders as funds are released during the build, helping with cash flow, thus making it easier to retain and live in your current house whilst building.
The stages depend upon the type of house, such as a traditional build, like a brick & block house, a timber frame house or when redeveloping or converting an existing building.
Equity Release Schemes
Equity release schemes are an ideal way to release equity from your property without the need to move. Popular with older homeowners who need some additional funds without wanting to move home.
The main types of equity release schemes are Lifetime Mortgages and Home Reversion Plans, both of which have pros & cons, so it is important to assess which product fits your lifestyle and finances the best.
You can find more information on each type of plan by clicking here.
You can choose how we are paid for mortgages; you can pay a fee, we can accept commission from the lender, or a combination of fee plus commission. Typical fee for mortgage advice is £499.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Commercial buy to lets are not regulated by the Financial Conduct Authority (FCA).
Most buy to let mortgages are not regulated by the Financial Conduct Authority (FCA).
The Financial Conduct Authority does not regulate some forms of Buy to Let, Wills or Tax Advice.