A guide to mortgages available

A guide to mortgages available

Buying a house is the biggest investment you're ever likely to make, so it's important to get all the information you need on mortgages before you start.

This guide will help you choose the right mortgage for you.

Fixed rate mortgages

Fixed rate mortgages are ideal for those who like to know how much they are paying each month. The advantage of a fixed rate mortgage is that if interest rates go up you won't see any increase in your monthly repayments. At the end of the two- to five-year term borrowers will typically be converted to the standard variable rate.

Variable rate mortgages

With a variable rate mortgage you'll pay the lender's standard variable rate of interest (SVR). This is linked to market conditions, which means that if the Bank of England puts the interest rate up - it's likely your SVR will also go up and vice versa.

You could end up saving money on your mortgage if interest rates drop because your payments will follow suit. But bear in mind, if rates go up so will your repayments. Take this into account when calculating your budget.

Discount rate mortgages

Discount rate mortgages have the interest rate set below the SVR for a limited time period. For example, if you have a one per cent discount and the SVR is five per cent, your rate would be four per cent. Then if the SVR rose to six per cent yours would rise to five per cent.

As with the variable rate, you could benefit from lower payments but the rate could go up instead. Also bear in mind that at the end of your discounted term your mortgage repayments will increase back to the standard rate.

Cashback mortgage

A cashback mortgage will give you a cash lump sum once you've completed on your purchase. This can be either a set amount of money or a percentage of the amount you have borrowed. However, if you repay the mortgage in full within a given time (three to five years) then the cashback must be repaid.

Why choose your mortgage through Ark Mortgages?

We are proud to introduce you to independent mortgage advice companies, which mean they work for you and can advise you on the most suitable mortgage for your needs, from the thousands of different mortgage schemes they have available.

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


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