Quick Guide To Mortgages

To help your understanding, here is a guide to the different type of mortgages available to you and your repayment options. Please click on the link below to find out more information. We have

1. Fluctuating
• Standard Variable Rate
• Discounted Rate
• Base Rate Tracker
2. Controlled
• Fixed Rate
• Capped Rate
3. Lifestyle
• Flexible
• Current Account
• Offset
4. Repaying Your Mortgage
   • Repayment (also know as capital and interest)
   • Interest only

Fluctuating

The mortgage rate fluctuates as the market moves.

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Standard Variable Rate

Your monthly mortgage payments will increase or decrease in line with your lender's standard variable rate of interest.

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Discounted Rate

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Base Rate Tracker

Your mortgage interest rate is directly linked to the Bank of England's base rate of interest. By tracking the base rate, you will mirror rate reductions, but will maintain a set margin over the base rate.

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Controlled

Your mortgage interest rate remains set and will not increase

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Fixed Rate

Your rate of interest can be fixed for a set period of time. In this way, you will know exactly how much your monthly payments will be for this period. Rising interest rates will not affect you.

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Capped Rate

Your mortgage interest rate will never rise above a certain level during an agreed period, but it will go down if interest rates fall. You will always be able to budget for a maximum monthly amount during the agreed period.

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Lifestyle

Relatively new to the market and, in many cases, can be linked to fluctuating and controlled rates

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Flexible

Allows you to decide exactly how much you can repay each month. Extra payments will reduce your mortgage or help to repay it early. You can also reduce or suspend payments when money is tight.

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Current Account

By combining your current account and mortgage, interest is calculated on the amount you owe at the end of each day. This means money that's been paid into your account that you have not spent is working to reduce your borrowings, minimising your monthly interest payments.

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Offset

Combines your mortgage with savings, personal loans and credit cards, which all benefit from a mortgage rate of interest. By offsetting savings against your mortgage, the amount of interest on the mortgage can reduce significantly.

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Repaying Your Mortgage

When it comes to repaying your mortgage, you have two options - repayment and interest only.

Once again, our qualified team will recommend the most suitable option for you, meaning you can enjoy peace of mind and security.

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Repayment

This is also known as capital and interest and is the safest way to pay back your mortgage. You repay the capital amount and the interest over your mortgage term. In the early years, most of the monthly payment goes towards paying the interest. Later, more is used to repay the capital loan. You will also need adequate financial protection to ensure your mortgage is covered if you die, or suffer a critical illness or have an accident that stops you working.

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Interest Only

You only pay the lender the interest on the amount you've borrowed. This means you will need a way to pay the full mortgage amount at the end of the term. You will need some way to make sure you can repay e.g.

• Via pensions
• Endowments
• Investments/savings (PEPS, ISAs, unit trusts, bonds)
• Inheritance
• Equity in other property

You will still need to protect your mortgage. We are happy to discuss these options with you and advise on the choices you have, and more importantly, recommend the best approach for you.

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