Mortgages can be tricky- not only do you need to consider which mortgage is most suitable for your current needs and circumstances, you also need to think about which interest rate options are most likely to suit your needs. This section has information on the various types of mortgage product which are available.
Fixed rate mortgages are popular, particularly in times of market uncertainty, because they allow you to fix your interest rate, and therefore your mortgage repayments, for a set number of years- this is usually 2 – 5 years but can be as long as 10 years.
This type of mortgage is excellent for budgeting purposes as your payments won’t change however if interest rates were to drop then you would not feel the benefits of this while on your fixed rate.
Remortgaging means you are switching your mortgage to a different deal with a new lender without moving property. Often this is done to reduce interest rates and therefore mortgage payments but it is also possible to raise additional funds against your property, by increasing your mortgage amount, for a number of reasons including to consolidate debts or for home improvements.
Buying a home for the first time can be a daunting prospect. There’re so many things to think about – and that’s before you’ve even considered the many mortgage products, rates and lenders to choose from- but we’re here to make to process as simple and as stress free as possible for you.
First time buyers are not limited by their status and many lenders offer exclusive rates just for them.
A low credit score or issues on your credit file won’t necessarily stop you from getting a mortgage, even if the issues are fairly recent. We have access to a range of lenders who deal with situations just like this and experienced advisers on hand to help guide you through the process. Due to their nature, adverse mortgages may require you to have a larger deposit and will attract higher rates of interest.
95% mortgages allow for flexibility for those who only have a 5% deposit however they are higher risk than other mortgage products and often have higher interest rates because of the reduced amount of equity in the property. They are suited to those who can comfortably afford their mortgage repayments but do not have a 10% or greater deposit to place on a property.
These are all variations of a variable rate mortgage. A tracker mortgage tracks a given interest rate which is usually the base rate set by the Bank of England, though it will not match it exactly- your rate will usually be set by a fixed amount above or below the base rate, which it will then adjust in line with should interest rates rise or fall.
A Buy to Let mortgage allows for the purchase of additional investment properties with the aim of either income or capital growth. Usually, a minimum of 20% to 25% of the property’s value is required as deposit, which is often higher than the deposit required for other types of mortgages and you can expect Buy to Let mortgages to have higher interest rates applicable to them. It’s worth also mentioning that, as of 1 April 2016, it is important to consider the added stamp duty implications of buying additional properties.
An offset mortgage allows you to reduce the amount of interest payable against your mortgage balance by offsetting your savings against a proportion of your outstanding mortgage. For example, if the mortgage balance outstanding is £150,000 but you have a savings balance of £10,000 in a current or savings account, interest is only calculated on £140,000 of the overall balance. Interest rates on these deals may be higher than other types of mortgage but can reduce the overall costs if enough is offset.
Flexible mortgages recalculate the outstanding capital and interest balance (the amount you owe) on a daily basis. This allows you to make overpayments when you have money to spare and see an immediate reduction in your loan. Some also allow you to make underpayments when finances are tight, which will increase the interest you have to pay in the long term. They may even allow you to take repayment holidays – a complete break from making payments as long as a reserve amount of money is in your account.
Any unpaid interest will be added to the outstanding mortgage; any overpayment will reduce it. Some flexible mortgages have the facility to draw down additional funds, to a pre-agreed limit.
With a self-build mortgage, money is released in stages as your build progresses. Some lenders will lend you money to purchase land – typically 75% of the purchase price or value (whichever is lowest). After this, the money for the build is released in stages. These stages can be fixed or flexible, depending on the lender, but usually there are six (see table below).
There are two methods by which the money can be released during the build – at the end of each stage (known as arrears stage payments) or at the start of each stage (advance stage payments).
With the arrears stage payment method, money is released after a valuer has visited the site and confirmed completion of the stage. This can cause some self-builders cash flow difficulties.
The advance stage payment method works in the opposite way, with money released at the beginning of a given stage, before work starts. This method has become popular as it provides positive cash flow during the build, making it easier to stay in your current house while the build progresses.
The stages of a build depend on whether or not you are building a traditional (brick and block house), a timber frame construction or if you are renovating or converting an existing property.
The following table provides an indication of the typical stages:
|Stage||Brick & Block||Timber Frame||Renovation / Conversion|
|1||Purchase of land||Purchase of land||Purchase of the property|
|2||Preliminary costs & foundations||Preliminary costs & foundations||Preliminary costs & structural overhaul|
|3||Wall plate level||Timber frame kit erected||Wind & watertight|
|4||Wind & watertight||Wind & watertight||Plastering & services|
|5||First fix & plastering||First fix & plastering||Second fix|
|6||Second fix to completion||Second fix to completion||To completion|
Equity Release Schemes
Equity release schemes are designed to allow (typically older) homeowners a way to release equity from their current properties without the need to move, meaning that they can continue to live where they are.
There are two main types of equity release mortgage; lifetime mortgages and home reversion plans. Both of these schemes differ in their benefits and drawbacks and it is important that if you are looking at this form of later life mortgage that you are aware of these differences and which product is right for you.
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.