There is a wide range of mortgage products on the market, which gives would-be homeowners more options for finding one that’s right for them, but it can also be confusing.
Choosing well can save you thousands of pounds, so it’s worth doing your homework on the mortgage market and having a realistic picture of your own circumstances so you know what could work for you.
The main difference between types of mortgages on offer on the market is in how and when you have to repay them. The most common categories are:
- Repayment. Paying off the interest and a part of the initial capital loan each month,
- Interest only. Paying only the interest each month, leaving the capital element to be repaid at the end,
- Fixed rate. The interest you must pay each month will remain the same throughout the length of the mortgage term,
- Variable rate. The interest rate on the mortgage can change, which means the amount you pay monthly varies too. The trigger for a change in interest depends on the type of variable rate mortgage you have:
- Standard Variable Rate (SVR): The interest rate is set by the mortgage lender as the standard rate it charges homebuyers and can be varied during the mortgage period,
- Discount: These offer a discount on the lenders SVR for a fixed period of time,
- Tracker: These mortgage rates will move in line with the Bank of England base rate, plus a few percent points on top, so it can rise and fall with changes in interest rates
- Capped: Normally aligned with the lender’s SVR, but a cap means the rate won’t rise above a certain amount.
- Offset: This will link your savings to your mortgage and instead of earning interest on your savings, you are charged less interest on your mortgage loan.
Your mortgage circumstances and goals
All mortgages have their pros and cons, so you must consider each in the context of your own circumstances. Answering these questions can help determine which mortgage may suit your finances best, as well as your priorities, such as whether you’re simply after the cheapest possible rate or you prefer safety and stability, and how long you want your mortgage term to last:
- Do you want to pay the same amount for your mortgage each month or are you comfortable with some change and uncertainty?
- Do you have additional earnings capacity or savings to cover an interest rate increase? • What length of mortgage term are you comfortable being locked into?
- Is your income likely to change, and how would this affect your ability to pay your mortgage? • Do you think you’ll be able to repay your mortgage early?
In uncertain financial times it’s particularly important to find the mortgage that works best for you. Fees, product availability specialty mortgages such as buy-to-let or the possibility of being rejected by the lender, due to your specific circumstances, also need to be taken into consideration.
Navigating your way through this and keeping track of product changes can be daunting, especially if your circumstances make it difficult to find a standard High Street product. However, a specialist and professional mortgage broker can help you search a wide range of options in the market.
Property buying support from Clayton-Welch Associates
Clayton-Welch Associates is a mortgage broker specialising in offering professional, impartial support to people who need a specific type of mortgage or who have experienced difficulties with mainstream mortgage lenders in the past.
We have also built up the experience needed to offer advice and support for our clients when it comes to determining their insurance needs and level of cover.
We offer a comprehensive range of mortgages from over 65 lenders across the market and we provide insurance products based on an analysis of a number of insurers.
Your property may be repossessed if you do not keep up repayments on your mortgage.
We rely on referrals for our business, so customer service is the foundation of everything we do. We are passionate about finding you the mortgage you want and we accompany you through every step of the way to a successful application.
Find out how Clayton-Welch Associates can help you to maintain your mortgage repayments through income protection by contacting us today.