Mortgages

Choosing the right Mortgage

Choosing a mortgage can be confusing as there are so many different types of mortgages on the market today. There are two main repayment methods: Interest Only and Repayment.

An interest only mortgage allows you to pay only the interest on the loan directly. It’s only at the end of the mortgage term you actually pay off the capital. It is common that as you make your repayments towards the interest, you should be paying simultaneously into an investment fund. Often this way you will be able to pay back the capital and even be left with some extra cash.

A repayment mortgage is the more traditional type of mortgage which incorporates regular (usually monthly) repayments of both capital and interest.

Fixed rate mortgages are agreed at a set rate which lasts for a certain period of time. This mortgage option does not allow you to take advantage of lower interest rates if the market rates drops but it provides you with stability, knowing exactly what your mortgage payments will be each month until the end of the fixed term. Fixed rates are usually between 1-5 years.

Variable mortgage rates fluctuate dependant on the Bank of England base rate. If rates increase you will see a rise in your mortgage repayments but equally if there is a drop in interest rates your monthly repayments will decrease as a result of this.

Other mortgage products that are widely available on today’s market that may suit your needs include: buy-to-let, right-to-buy and commercial mortgages.