Mortgages

This is the most common mortgage when taking out a new mortgage. There are fixed periods normally ranging between 2 -5 years with some lenders offering 10 years fixed rate deals. Fixed mortgages help you budget so you know exactly how much your monthly payment will be within the chosen period.

When considering a fixed product, bear in mind, most lenders will have an “ERC” (early repayment period) meaning if you want to sell or make any changes within the fixed period you could be charged with a percentage payment as a penalty. Speak to an advisor to make sure the product suits your present and future circumstances.

Each lender has an SVR which the lender sets at their own rate. This would normally be the most expensive rate your mortgage interest would be set on. After a fixed period you automatically would fall on to the lenders SVR rate. Lenders do send a notice prior to your fixed rate ending. Clients may choose to stay on an SVR if selling there home not to incur any further charges on redemption of the mortgage.

Discounted Rate Mortgage – Discounted on the lenders SVR over a set period. The amount can change of the SVR goes up or down.

Tracker Mortgage – Normally adds a fixed amount on top of current Bank of England Base Rate again can go up or down.

Flexible Mortgage – Allows you to overpay or underpay on the monthly payment agreed with the lender.

Offset Mortgage – A type of flexible mortgage that allows you to use your savings to reduce the amount of interest you pay on your mortgage. You would need an account with the lender you hold the mortgage with.

In recent years lenders have tried to accommodate the different types of lenders introducing new and innovating products to conventional mortgages.

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  Repayment

  Residential Mortgages are now normally taken on a repayment basis set on a Term outlined by the client.

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  Interest Only

  Options are available for residential mortgage to be taken out on interest only basis however this is largely down to the clients level of income.

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  Affordability

  Every lender will use an affordability calculation to determine the amount you can borrow. Income and expenditure would be taken into consideration, with most lenders offering in the region of 4 to 5 x income with some lenders going as high as 5.5 x income in recent years.

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  Credit History

  Credit scoring plays a vital role with gauging which lenders will accept your mortgage application. A clear credit history with low debt to income ratios are normally what lenders are looking for with Electoral role registered at the address history. The High Street lender would offer the best rate, however specialist lenders are available for clients who have lower credit scoring.