Mortgages

A mortgage can be one of the largest financial commitments you ever make. Not only this, it can also be a challenging process in selecting the right mortgage to suit your individual needs. There’s a wide range of mortgage products available, with varying interest rates and repayment options available. The different types of mortgage deals on the market can seem confusing. Seeking good, independent, Mortgage advice can take the hassle and confusion away from helping you find the right product.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Here is a brief rundown of the main mortgage types available.

Offset Mortgages – An offset mortgage enables you to use your savings to reduce your mortgage balance and the interest you pay on it.

Remortgages – Remortgaging means switching your mortgage to another deal – often with another lender. Most people remortgage because their existing deal has ended.

Second Charge Loans* – Second charge loans can be secured against residential or Buy to Let properties.

Self Build Mortgages – These are mortgages suited to people building a new home. With a self build mortgage, money is released in stages as the build progresses.

Bridging Finance* – A bridging loan is taken out to ‘bridge’ the gap between the purchase of a new property and the sale of an existing one.

Buy to Let Mortgages – These types of mortgages are designed for property investors and private landlords, who do not intend to live in the purchased property.

Buying a home – Before you choose a specific deal, you need to decide what type of mortgage is the most appropriate for your needs.

Equity Release – Equity release can help people release cash (equity) in their homes for a particular purpose, like supplementing retirement income. This is a lifetime mortgage/Home Reversion Scheme.  To understand the features and risks, ask for a personalised illustration.

First Time Buyers – People buying their first home often have specific needs when it comes to finding a mortgage. A range of mortgages exists specifically for this market sector.

Flexible Mortgages – With options for overpayment and payment ‘holidays’, a flexible mortgage can make the traditional 25-year British mortgage look rather old-fashioned.

Standard 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.

Fixed Rate – mortgages are offered at a specific rate of interest over a specific period of time meaning your mortgage payments will be the same each month over the period. This helps you budget and means you haven’t got to worry about interest rate changes resulting in your mortgage repayments going up. However you will not benefit from lower monthly payments when interest rates are lower. Fixed rate mortgages are most commonly offered for two, three and five-year periods although some lenders also offer 10 and 25 year terms.

Base Rate Tracker – 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.

Discounted Rate – the lender offers you a rate which is lower than its SVR for a given period, usually the first few years of the loan. After this the mortgage will switch back to the SVR. Discount rate mortgages are attractive as they offer you a saving in the early part of the mortgage and as it is linked the lender’s SVR, your monthly payments should drop if the Bank of England Base Rate drops (assuming the lender passes on the rate cut!). Discounted rate mortgages can give you a softer start to your mortgage, however, you must be sure that at the end of the discounted rate term, you can afford the increased payment.

Other types of non-residential mortgages available include:

Buy to Let – may be of interest to you if you are looking at purchasing a property not as your main residence but in order to rent/let it out to tenants, as an alternative source of income. Buy to Let mortgages typically entail a larger deposit (normally upwards of 25% of the value of the property).

Commercial Mortgages* – are typically loans for commercial (i.e. business) purposes and are usually secured against business premises (i.e. commercial property), though residential property may be used. The successful repayment of the mortgage relies upon the success of a business as opposed to just maintenance of a salary, and as a result the fees and rates for such a mortgage are higher than for a standard home loan.

At Irlam Estates Financial Services we can advise you on all types of mortgages. Please use our online contact form or call us on 0161 777 9797 if you would like to discuss your mortgage options with an adviser.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTAGGE OR ANY OTHER DEBT SECURED ON IT.

*Irlam Estates Financial Services doesn’t provide advice on the above, we refer you to selected third parties.