Mortages Explained

Our knowledge, expertise and experience will help equip you with the resources to find the most appropriate mortgage for your circumstances. We are able to search the whole market place and therefore have access to some of the most suitable mortgage packages available. The right advice can result in your property returns realising their full potential.

Basically there are two types of mortgages, Capital Repayment and Interest Only.

Capital Repayment Mortgage

This mortgage guarantees the capital and interest will be repaid at the end of the agreed mortgage term.

Interest Only

Interest Only Mortgages mean your monthly payments only pay the interest charges on your loan. The loan amount borrowed will need to be repaid at the end of the term of the mortgage. The advantage of this type of borrowing is that monthly payments are generally lower than other types of mortgages. However, other arrangements for repaying the loan amount must be made at the end of the mortgage term.

The following can be applied to both Capital Repayment and Interest Only mortgages and will determine your monthly payments and the length of term of the mortgage.

Standard Variable Rate Mortgages

Standard Variable Rate Mortgages or SVR describe the mortgages that follow the rising and falling rates set by the lenders in conjunction with and in reflection of the changes to the Bank of England’s base rate. Discounted and fixed mortgages often revert to SVR mortgages at the end of the agreed term.

Flexible Mortgages

Borrowers can be in far more control of their monthly payments with a Flexible Mortgage; they can choose to make overpayments, which means the term of the mortgage can be reduced, this in turn allows the overall cost of borrowing to be reduced. Payment vacations or suspensions of payments allow flexibility of lifestyle but may increase the term or overall cost of the mortgage.

Fixed Mortgages

These have proven popular with borrowers who want to be able to budget with no surprises in any base rate increases; the rate of interest is ‘fixed’ for an agreed term. Usually penalties apply in the form of early repayment charges should you want to repay the mortgage early.

Tracker Mortgages

Tracker Mortgages are tied to a base rate, usually the Bank of England. Rates are set a certain percentage above the Bank of England’s rate and are guaranteed to reflect any increases or decreases. Early repayment charges may apply.

Discounted Rate Mortgages

These are mortgages which feature interest rates set below the lender’s Standard Variable Rates for a specific period of time. Discounted Rate Mortgages allow payments for a set period of time to vary in line with changes in the lender’s Standard Variable Rate. After the set term expires, interest typically reverts to the Standard Variable Rate. Early repayment charges are usually attached to Discounted Rate Mortgages.

Buy-to-Let Mortgages

Buy to Let Mortgages are more expensive than traditional mortgage products due to the higher risks involved to the lender. The lender will require establishing a pre-determined percentage by which monthly rental income would normally exceed the monthly mortgage repayment figure.  They are also increasingly taking into account and are subject to proof of assets or income.

If you are interested in developing a property portfolio or increasing your existing one, we can advise on the most suitable opportunities available and how to minimise risk.

In general, Buy to Let mortgages are not regulated by the Financial Services Authority.