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To assist our clients, we have put together some information to help build your mortgage knowledge. Please remember that this mortgage information is very basic. Before choosing a mortgage you should seek expert advice by using our UK mortgage specialist contact form available here.
Firstly, UK mortgages fall into two main categories. Repayment mortgages and Interest only mortgages. Repayment mortgages involve paying the initial amount borrowed along with interest progressively over the term. Interest only mortgages involve paying just the interest during the term of the mortgage, with the amount borrowed due for repayment at the end.
There are also many different UK mortgage types within the two main categories, some of which are mentioned below.
Fixed Rate
A fixed rate mortgage involves a set interest rate for a specific period of time. After this time the mortgage usually reverts to the lenders standard variable rate mortgage. This type of mortgage can be good for people on a tight budget as for the initial period, mortgage payments will stay the same.
Capped Rate
A capped rate mortgage will have boundaries set for the interest rate for a specific period of time. If the lenders standard rate goes outside of these boundaries, you will be unaffected. This can have positive effects if the UK economy takes a turn for the worse and interests rates rise above the ceiling boundary, but could also have negative effects if the opposite was to happen. Again like fixed rate mortgages, the mortgage will revert to the lenders standard variable rate after the initial period has ended.
Variable Rate
The typical mortgage, a variable rate mortgage follows the lenders standard interest rate which will vary throughout the term, depending on the UK economy in general.
Cash Back
Some mortgages offer a cash back payment when the mortgage is taken out. This lump sum can be very beneficial to people with limited funds such as first time buyers.
It is important that you seek expert advice from a UK mortgage specialist using our contact form (available here) before deciding on a mortgage to avoid any unwanted charges such as early repayment penalties and to gaurentee you get the best mortgage for your circumstances.
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