For most people the mortgage is their largest monthly outgoing. Getting the wrong mortgage can cost you thousands of pounds more than it needs to. Take some sensible, impartial advice and get the right deal from the start. You have a wide range of choice: there are many different types of mortgages to suit many different purposes. Your advisor can help you determine which is the most suitable for your circumstances - all in the comfort of your own home!

Standard Variable

Variable rate mortgages are the most familiar type of loan. The interest you pay goes up and down during the lifetime of the mortgage, broadly in line with the interest rates imposed by The Bank of England. When the rate rises the amount you have to pay rises and when the rate falls the amount you have to pay falls.

Some lenders offer a way of leveling out interest rate changes over the year. In this way your payments only change once a year. This usually doesn't affect payments overall, but it does make it easier to budget for the year ahead.

Discounted

Some lenders offer a discount on the rate they normally charge borrowers for a limited period at the start of a mortgage - after the discount period the mortgage reverts to a standard variable rate. The important thing to keep in mind is the amount by which your payments will increase at the end of the discounted term as this could be a substantial amount.

Fixed

A fixed rate mortgage gives you a guaranteed rate of interest for a given period of time, after which it reverts to a standard variable rate. This situation can be very comforting if you have a large mortgage or a tight budget as you can ensure a fixed payment for an agreed term.

Bear in mind that, although you benefit when interest rates rise, you also do not benefit when the interest rates fall. You should think carefully about how long you want to be locked into the same rate. Fixed rate mortgages can have expensive charges if you want to switch to a different mortgage during the fixed term.

Tracker

A tracker mortgage works in a similar way to a standard variable rate mortgage in that it follows the rates imposed by The Bank of England. Whereas the standard variable rate mortgage changes monthly of annually a tracker mortgage usually guarantees to follow changes in the base rate within 14 days of it happening. Thereby the borrower benefits from from both falls and rises in the interest rate sooner.

Cash-Back

Some lenders offer cash back mortgages where a small percentage of the loan is payable to the borrower shortly after completion of the property purchase. These deals can be appealing, particularly to the first-time buyer who may need to purchase furnishings etc.

Capped

A capped rate mortgage is a variable rate mortgage with one main difference. Your payments increase and decrease with he interest rate but you have the comfort of knowing that the rate will not exceed a certain level. This is known as the 'cap'. This level is dictated at the outset, normally for a given period, after which it reverts to a standard variable rate. Sometimes the rate cannot fall below a certain level, known as the 'collar'.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT
KEEP UP REPAYMENTS ON YOUR MORTGAGE