Buying a Home
House buying can be a stressful and daunting experience. Whether you are buying your first home or are an experienced home mover our specialist team can help make the process easy and stress free, liaising with all parties involved on your behalf. Book an appointment today!
Before you choose a specific deal, you may want to understand more about what types of mortgage are available. This summary may help.
Common Types of Mortgage
Variable Rate – Your monthly payment fluctuates in line with a Standard Variable Rate (SVR) of interest, set by the lender. You probably won’t get penalised if you decide to change lenders and you may be able to repay additional amounts without penalty too. Many lenders won’t offer their standard variable rate to new borrowers.
Tracker Rate – Your monthly payment fluctuates in line with a rate that’s equal to, higher, or lower than a chosen base rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years. You may have to pay a penalty to leave your lender, especially during the tracker period. A tracker may suit you if you can afford to pay more when interest rates go up – and you’ll benefit when they go down. It’s not a good choice if your budget won’t stretch to higher monthly payments.
Fixed Rate – The rate stays the same, so your payments are set at a certain level for an agreed period. At the end of that period, the lender will usually switch you onto its SVR (See Variable Rate). You may have to pay a penalty to leave your lender, especially during the fixed rate period. A fixed rate mortgage makes budgeting much easier, because your payments will stay the same – even if interest rates go up. However, it also means you won’t benefit if rates go down.
Discounted Rate – Like a variable rate mortgage, your monthly payments can go up or down. However, you’ll get a discount on the lender’s SVR for a set period, after which you’ll usually switch to the full SVR. Discounted rate mortgages can give you a gentler start to your mortgage, at a time when money may be tight. However, you must be confident you can afford the payments when the discount ends and the rate increases.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Some Buy to Let mortgages and some Bridging Finance is not regulated by the Financial Conduct Authority.A Lifetime Mortgage is not suitable for everyone and may affect your entitlement to means tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.
The interest that may be accrued over the long term with a Lifetime Mortgage, may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.
Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a Lifetime Mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your Financial Adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead.
We have Advisers based across the UK so get in touch today to arrange your appointment and see how we may be able to help you – we offer virtual and telephone appointments at a time to suit you.