There are many different types of mortgages available. Depending on your situation, your mortgage needs may change throughout your lifetime.
Here are some top-line facts on the different types of mortgages that are available to you.
Repayment Mortgages
Repayment mortgages are by far the most common type of mortgage. This is where you repay a bit of the capital, which is the amount you borrowed, as well as some interest as part of each monthly payment.
In the first few years a bigger proportion of each monthly payment goes towards the interest, but over time the balance shifts and less goes towards interest and more goes towards paying off your loan.
Interest Only Mortgages
An interest only mortgage allows you to pay just the interest charges on your loan, not any of the original capital borrowed.
This means that your payments will be less than on a repayment mortgage, but at the end of the term you’ll still owe the original amount you borrowed from the lender.
Fixed Rate Mortgages
A fixed rate mortgage allows you to keep your interest rate the same for a set period of time.
There are plenty of fixed rate mortgages available, in fact there are more fixed rate mortgages available than any other type of mortgage.
Tracker Mortgages
A tracker mortgage doesn’t tie you down to a certain fixed rate which means your payments could go up or down. They move directly in line with another interest rate – normally the Bank of England’s base rate plus a bit more.
You can choose a tracker for a set period of years – once this is over, you can either switch to a new tracker or fixed rate, or your mortgage will move to a follow-on rate.
Discount Mortgages
A discount mortgage has an interest rate that is set a certain amount below the lender’s standard variable rate (SVR). It goes up and down when the SVR moves.
The difference between this and the Tracker Mortgage is that it tracks the rate by the lender, its SVR, rather than the Bank of England. This means your bank can change the rate you pay whenever they like.
Standard Variable Rate Mortgages
A standard variable rate mortgage is what you will be transferred onto a fixed, tracker or discount mortgage comes to an end.
It is a variable-rate mortgage which means the total amount that you repay could change monthly.
Specialist Mortgages
Sometimes you may need a specific type of mortgage. These can range from bad credit mortgages, mortgages for the self-employed and guarantor mortgages.
You may not be able to get deals from every lender, but there are options available for specific circumstances.
To find out more about how we can help, give us a call on 01604 609209
Your home may be repossessed if you do not keep up repayments on your mortgage.
