Are you looking for the right type of mortgage you can repay with ease? Do you seek a remortgaging plan that can help you pay off your other loans while you still save money? Remortgage Fast has got a wide range of products for you to choose from. Wherever you are within Hampshire and it’s environs, we got you covered. No matter how overwhelmed you are when it comes to selecting the ideal mortgage, our real estate experts are always available to put you through.
We at Remortgage Fast have taken out time to bring you detailed information on the different types of mortgages you can ever find in the UK and even around the globe. After going through this, we can assure you that telling a lender or even a broker about the type you prefer won’t be an issue. Here’s a run-down of the several mortgage types there are.
Fixed Rate Mortgage
Just like the name states, it involves the repayment of a fixed interest rate every month for a particular period of time or throughout the duration of the mortgage. If the fixed rate you got for a 25 year home loan lasts for the first 5 or 10 years, your monthly payment automatically reverts to a Standard Variable Rate (SVR) after the fixed period elapses. However, you can remortgage to another type of loan before the period comes to an end – if you wish.
The advantage of the fixed rate mortgage is that you can easily budget your spending – especially when you get your earned income – because the monthly payment is set at a specific amount. If interest rates get higher, you will still pay the fixed amount. Nothing feels good in mortgaging like knowing how much you are expected to pay at any given time. But the issue here is that when the rate fall, you still pay the same interest. Infact, some lending institutions charge you a penalty for an early repayment of the loan.
Standard Variable Rate Mortgage (SVR)
In the UK, most borrowers actually prefer the Standard Variable Rate because they want to pay within the base rate of the Bank of England and other lending institutions – without worrying about any bookings for early repayment of the loan. The interest rates some lending institutions like banks actually charge is just about 1-2 points higher than what the Central Bank in the UK charges. Although, rates vary from bank to bank. It’s at the bank’s discretion to either increase their rate a bit or not. But borrowers benefit from a drop in the rate.
The major reason people go for SVR is because the mortgage rate they pay falls anytime the interest rate decreases. Although, the terms and conditions of this type of mortgage are believed to be relatively easy to understand. But the disadvantage is that you will also pay a higher rate should the interest rates go up as well. Infact when the rates go down, banks are unlikely to all the benefits of a total drop. Furthermore, going with the SVR means you won’t be able to plan your budget easily.
Tracker Rate Mortgage
This is pretty much the same as the SVR but depends majorly on the base rate of the Bank of England. Whenever it falls or rises, so does your mortgage repayment. It’s easy to keep track of what your next repayment is meant to be. Infact, banks are beginning to offer their own tracker rate mortgage package. The disadvantages are also similar to that of the SVR.
Capped Rate Mortgage
This is like the SVR – but with a cap. This means that no matter how much the rates fluctuate, the mortgage cannot to rise or fall below a given mark. Some lending institutions add this as an option in the fixed rate mortgage. You can even find a lender who can restrict the rise on the rate.
The benefits of taking this mortgage is that no matter how high the rates get, you still know the amount it cannot exceed. But the disadvantage is that, what if it falls below the cap? It means you won’t enjoy the base rate other borrowers in SVR enjoy.
The discount mortgage is like a fixed rate mortgage, but it’s more of a reduced rate that lasts for just 1 or 2 years before it goes back to the normal rates in the market. So it’s like a combination of the SVR, Fixed and Tracker rates.
The advantage is that the reduced rate you pay in the first year (or first 2 years) is even lower than most fixed rates, so you’re able to save as soon as you start repayment. But after that reduced period, you repayments might increase to very large monthly payments that you may not be able to keep up with.
Flexible Rate Mortgage
This is a pay-as-you-can mortgage. You can underpay and overpay – depending on how much you have a particular time. Infact, some even let you take a break from payment – if you have other pressing needs. But the disadvantage is that the rates might not be as affordable as the popular types.
Cash Back Mortgage
This type of mortgage allows you have extra money on the balance of your loan. You can use the extra money to handle other core needs. It can be financed for a really long period of time but it means you will pay more to finish the repayments.
Current and Offset Mortgage
A current mortgage is one where the loan is merged with your current account. While the offset mortgage keeps the money is different accounts. Therefore, you can offset your balance with money in your current and savings account.
If you’re a first time borrower and you are a bit confused about what type of loan you should take, we are here to help you. Are you in Southampton, Portsmouth, Basingstoke, Gosport, Andover, Waterlooville, Aldershot, Farnborough, Fareham/Portchester, Eastleigh, Havant, Winchester, Fleet or Petersfield? Call the number at the top of this page, and our experts will give your the professional advise you seek!