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01844 390910
info@bmimoney.co.uk
01844 390910
info@bmimoney.co.uk
The first step on the property ladder is understanding the various types of mortgages.
for independent mortgage advice
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Choosing a mortgage is a big task. There are so many options to choose from and it can be difficult to know which one is right for you. With our independent mortgage advice, we will help you find the most suitable mortgage type that suits your needs and future goals.
With fixed rate mortgage deals, you will pay the same amount for the length of the deal no matter what happens to the Bank of England base rate. The fixed part of the mortgage is often two or more years, and will automatically revert to the lenders standard variable rate at the end of this period.
During the fixed rate period there may be financial penalties if you wish to leave or change deal. Towards the end of the fixed deal you should look for a new mortgage deal as the lenders standard variable rate is often much higher.
Your monthly payment will remain the same, helping you to manage your finances.
If variable rates fall, you will not benefit. Fixed rate mortgages often have slightly higher interest rates than variable mortgages.
The interest that you pay on your mortgage loan can change at any time. There are a number of variable rate mortgage deals: Discounted, Tracker, Capped or Offset.
Make sure that you have some savings in place should the interest rate increase. You may be charged if you choose to leave a discounted or capped deal.
You have the option to overpay, or leave at any time without penalty.
The amount you pay each month can go up or down.
Discounted mortgages offer a percentage discount off the lender’s standard variable rate (SVR) which will be applied for the first 2 or 3 years of the mortgage. Comparing discounted rates requires careful checking as you will need to consider both the SVR as well as the discount offered.
You may be charged if you leave before the end of the discounted period. Banks can change their own SVR at any time, it does not mirror the Bank of England Base Rate
Payments will be lower at the start of the mortgage term. If the lender cuts their standard variable rate (SVR) you will pay less.
The lender may raise their interest rate at any time.
Tracker mortgages move in line with the Bank of England base rate rather than the bank’s standard variable rate. Tracker deals are calculated using the base rate plus a few set percent, so if the base rate goes up or down 0.25%, your payment will change by the exact same rate.
Tracker mortgage deals are typically 2 – 5 years before moving to the lenders own SVR, however some lenders offer tracker deals for the entire life of your mortgage.
Check the small print of the deal. Some lenders may be able to change the rate offered at any time.
If the BoE base rate falls, your mortgage repayments will fall.
If the BoE base rate increases, your mortgage repayments will increase. You may have to pay an Early Repayment Charge should you leave before the deal period is over
Capped mortgages move in-line with the lender’s standard variable rate (SVR), but will not increase above an agreed level (cap). The cap will be applied for the first 2 or 3 years of the mortgage before reverting to the lenders SVR.
The cap tends to be set high so make sure you understand and can afford the maximum payment.
Assurance that your payments will not increase above a set amount. If the lender reduces their standard variable rate (SVR) you will pay less.
The lender may raise their SVR at any time up to the cap level.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
When you speak to us early in your house buying process we will be in a better position to proceed once you find your new home.
It would be helpful to have some figures to hand:
We suggest getting an Experian Credit Report to ensure you have a good credit history, especially with a high loan to value mortgage.
We will then compare and source great mortgage deals for you by searching the whole of market with the aim of saving you time and money.
With our main office in Thame, our brokers are located all over the Home Counties so we’re never far from providing the help you need.
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