The payments on this type of mortgage are usually paid monthly.  The payments include two elements:-

• repayment of the capital you have borrowed (i.e the mortgage loan)
• the interest on the loan.

As a typical example on a standard 25 year loan, during the early years (0-5) most of each payment goes toward paying interest and a smaller part goes toward paying off the balance of the loan (the capital).  As time elapses (5-17), more of the payment goes to paying off the capital and in the latter years (17-25), the majority goes to paying off the balance of the capital.

The payments on this type of mortgage are usually paid monthly.  An interest only mortgage is, quite simply, repaying monthly the interest of the loan.  The capital is repaid to the lender at the end of the loan period.

The lender in most cases will grant this sort of loan on the condition that you have an investment plan in place that will repay the capital at the end of the loan period

A mortgage taken with a variable rate will mean your monthly repayments can go up and down. This is because the interest is usually linked to Bank of England base rates, plus the rate at which each lender is prepared to lend money, which rise and fall in accordance with a number of factors. A fall in interest rates will see you paying less each month, while a rise will have the opposite effect. Most lenders offer a ‘standard variable rate’ which can differ between lenders.

As with variable rate, but linked directly to the Bank of England base rate – a margin above or below.

For more information on our Tracker Mortgage, call us free on 0800 43 20 322.

This type of mortgage removes the uncertainty of variable interest rates and promises a stable rate for a fixed period. Typically, people choose to fix their mortgage rate for between 2 and 5 years, so that they know where they stand in terms of their monthly repayments.

As a general rule, the longer the fixed term the higher the rate of interest.

The downside to choosing a fixed rate mortgage is that, should variable rates fall, you could be paying more than average. You may also face an early repayment charge if you decide to change your mortgage before the fixed term ends. This fee could amount to several months’ interest.

For more information on our Fixed Rate Mortgage, call us free on 0800 43 20 322.

Capped rate mortgages can be thought of as a halfway house between the variable and fixed rate options. For budget-minded people, there is the advantage of knowing that the interest rate won’t exceed a given ceiling (or ‘cap’) for a specified number of years. Yet if the variable rate offered by the lender should fall, so would your rate.

This is a mortgage which offers a reduction in the lender’s variable interest rate for the first period of the loan (often 1 or 2 years). Discounted rates can help reduce initial monthly repayments – useful if you’re just stepping onto the property ladder, for instance – but there is no reduction in overall repayment.

Sometimes, borrowers are offered a variable rate mortgage with a ‘cashback’ element. This usually takes the form of a lump sum cash payment (calculated as a percentage of the loan) made instantly available to you and repayable when the mortgage completes. It’s a useful way to unlock some cash to help with the expense of moving into a new home. It is likely, however, you will have to repay this cash if you redeem the mortgage within a specified period.

Current account mortgages combine a mortgage and a current (banking & cheque) account designed to fit into the ‘modern lifestyle’ and can be ideal if you would like the option to overpay on your mortgage (e.g. if you are self-employed, or receive irregular bonus payments).

Like current account mortgages, offset products allow you to offset the balance of your funds in a savings and/or current account held with the same lender, and pay interest on the net balance between the accounts.

A 100% mortgage can sometimes be the only way of securing the property you want when property prices are rising faster than you can save a deposit.

100% mortgages are usually taken by first-time buyers, couples who have separated, or those buyers that have other uses for their hard-earned cash.