What Type Of Mortgage Do You Want?

If you are looking for a mortgage one of the things you have to decide on is which type of mortgage you want. There are six main types of mortgage each with their own features.

Standard variable rate

All lenders have a Standard Variable Rate (SVR) which is variable and normally fluctuates with any changes in Bank of England base rate. Although it is not directly linked to the Bank of England base rate lenders will generally adjust their SVR in response to any changes in base rate. Most mortgages with special terms revert to the SVR after the period of the special term expires.

Discount Rate

A discount rate mortgage is a variable rate mortgage which offers a discount from the lenders standard variable rate for an initial period of time. The lower discounted rate increases or decreases in line with any changes in the lenders standard variable rate. As a general rule the shorter the period of the discount the higher the level of the discount. At the end of the discounted period you will revert to the lenders standard variable rate.

Tracker Rate

A tracker rate mortgage is another type of variable rate mortgage however the interest rate is linked to the Bank of England base rate rather than the lenders standard variable rate. The lender will charge the borrower a percentage, for example 0.5%, on top of the base rate. This rate can apply for a certain period or for the term of the mortgage

Fixed rate

A fixed rate mortgage fixes your interest rate for a period of time, meaning your monthly payment won't change. This period can be as short as 1 year or as long as 25 years. As a general rule the longer the period of the fixed rate the higher the interest rate that applies. If you are a first time buyer you may like the idea of a fixed rate product, as having fixed monthly payments will make it easier for you to budget. At the end of the fixed rate you will revert to the lenders standard variable rate which is often higher than the fixed rate.

Capped Rate

A capped rate mortgage is a variable rate mortgage with a maximum interest rate for a specific period. The interest rate cannot rise above the pre agreed capped rate during the specified period. If the lenders interest rates fall below the capped rate the borrower will benefit from any reduction. Capped rates may also have a 'collar' which means the rate can not fall below this level.

Current Account Mortgage

A current account mortgage (CAM), is a variable rate mortgage which is linked to your bank account. The interest is calculated daily and any money in your bank account can be offset against the outstanding mortgage balance. This can be used to reduce your monthly payments or reduce the term of the loan. Interest is calculated on a daily basis on a CAM and they offer a lot of flexibility. CAMs are often suitable for people with fluctuating incomes. They can be particularly tax efficient for higher rate taxpayers.

Offset Mortgage

An offset mortgage is similar to a CAM however it often uses a savings account balance as well as your current account balance. Any savings accumulated in the savings account and your current account can be offset against the outstanding mortgage balance. This will have the effect of reducing the interest charged on your mortgage which can either reduce your monthly payment or reduce the term of the mortgage.

When you are thinking about which type of mortgage that you are going to take consider these points.

The best way to do this is to use a mortgage comparison site that allows you to look at all the mortgage types: one that is independent of all lenders and compares the whole of the market; and one that enables you to apply directly to the lender.

Francis Ghiloni

Francis Ghiloni works as the Marketing Director at mform.co.uk. mform.co.uk allows you to compare mortgages and remortgages from every lender in the UK. mform is independent, free to use and enables you to apply for a mortgage from the whole UK market.

Baldness Female Island Pattern Rhode
Medical Insurance Laws
Haircare
Ebay
Baldness Hair Loss Products Hair Loss Products
Group Health Insurance Colorado
Saw Palmetto Extract Baldness
Look Globe College Loan Consolidation
Student Loans And College Loan Consolidation Consolidate
Auto+insurance
Baldness Hair Loss Medication
Life Insurance Company In Ut
University Student Health Insurance
Male Pattern Baldness In Woman
Insurance Term Life
Ca Health Insurance
Federal Consolidation Loan
Business Credit
Female Baldness Puerto Rico
Baldness In Woman
Health+indiana+insurance+keyword
Parent College Loan College Student Loan Consolidation
History Of Baldness
Cheap Car Insurance For New Driver
Auto Loans For Self Employed With Bad Credit
Medical Insurance Minnesota
Uk Destinations
Affordable Health Dental Insurance
Title Insurance Company
Health Insurance
Business Home Ideas Simple
Baldness Hair Loss Baldness Hair Loss Product
Ahome Insurance Quote
Home Title Insurance
Unsecured Personal Loans For Council Tenant With Bad Credit
Alaska Health Insurance
Private Lenders For Personal Loans Bad Credit
Unsecured Loans For People With Bad Credit History
Home Equity Loans For Canadians With Bad Credit
Male Pattern Baldness Remedy
Insurance Auctions
Uk Online Car Insurance Quote
Philadelphia College Loan Consolidation
Unsecured Personal Loans For Very Bad Credit In Usa
Cell Phones
Rv Insurance Quotes
Female Baby Baldness
Health Insurance Company In Florida
Uk Debt Consolidation Loans For Bad Credit
Contest Prize Insurance
Insurance Claim Services
Male Pattern Baldness Wig Ourhairloss
Natural Cure For Baldness
Ebook4
Homeowner Insurance Texas
Budget Car Insurance Quote
Home+insurance+cincinnati
Tri State Auto Insurance
Car Insurance Price
Buy And Sell Stock On Ebay
Hair Loss Product Hair Loss Treatment Baldness Hair Loss
Safari Browser
Government Bad Credit Loans For Military Personel
Pmi Mortgage Insurance Co
Garlic Baldness
High Risk Auto Insurance
Ohio Car Insurance Quote
Car Insurance Company Ireland
State Farm Insurance Windshield Replacement
Personal Loans For Bad Credit 20000
Affordable Life Insurance Quote
Baldness Herbal Male Pattern Treatment
College Loan Consolidation Companies
Online Mortgage Insurance Protection
Long Term Care Insurance Lead