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There are a wide variety of mortgages to choose from so deciding which one might be best for you can be confusing, even overwhelming. The temptation is to stick to what you know, but how do you know you are getting the best deal?
The only way to make sure you are being presented with the best options available to you, is to seek advice from a comprehensive mortgage adviser.
There is no need to be daunted by the prospect of seeing mortgage adviser, you will be pleased to hear that it is simpler than visiting your high street bank.
We offer a tailor made personal and professional service to suit your situation without the need for you to leave your home. Carter Moore LLP is built on integrity and the simple philosophy that puts our client at the heart of all that we do.
We work closely with our clients to achieve their financial goals and provide advice that is not only based on your financial situation today, but also your aspirations for the future.
We recognise that your goals and your circumstances will continually change, which is why we will regularly review your plans.
• It is important to understand that different types of mortgage come with different repayment options and interest rates. Here are some of the most common types of mortgage:
Fixed rate mortgages mean you agree on a rate of interest that stays the same for a set period of time.
Variable rate mortgages mean your payments go up or down depending on the interest rates set by your lender. Tracker mortgages mean your payments can go up or down since they're linked to an interest rate, often set by the Bank of England.
Capped rate mortgages are a type of variable rate mortgage, which have a cap or ceiling on the amount that you will have to pay. Your payments may go up or down under that amount, as interest rates increase or decrease, but you wouldn't have to pay more even if the interest rate rises above the cap/ceiling rate.
Collared mortgages are usually found in combination with a capped or tracker mortgage – it means there's a set limit on how low interest rates may go (the 'collar'), so your payments would never fall lower than a certain level.
Cashback mortgages give you an extra lump sum of money, often at the beginning of your mortgage. Offset mortgages allow you to cut down on the interest you pay on your mortgage by sacrificing interest earned on your savings (held with the same lender in a savings account).
There are three ways in which you can repay your mortgage, depending upon what a lender will offer and your financial circumstances.
Repayment (capital and interest)
This is the most common option. Your regular repayment is made up of some of the amount borrowed plus interest every month. It means your mortgage will be repaid in full by the end of the term providing all payments are maintained in full and on time.
Interest-only
This means each month you only pay the interest on what you've borrowed, which usually means lower monthly repayments. However, at the end of the agreed 'mortgage term' you still owe the whole amount borrowed and you have to find a way to pay that back. You'll need to be paying into another investment to accumulate the money needed to repay the mortgage at the end of the term, such as an endowment policy, ISA, or pension, or have an alternative repayment plan in place, and be confident that you have in place the means to repay the full loan mount at the end of the term. Many lenders now restrict the size of the loan you can have on an interest only mortgage to a certain percentage of the property value (e.g. a maximum loan of 50% of the property value).
Part and part mortgage
This is an option that lets you repay part interest-only and part repayment each month.
Once we have assessed your personal circumstances, we will find a mortgage product that is most suitable for you based on the following considerations;
• How the interest rate is applied, i.e. fixed, variable, tracker, capped, collared, cashback, offset etc.
• The term of any introductory rate
• The term of the mortgage
• What rate you pay at the end of any initial rate
• Flexibility – can you make over-payments? If so, how much?
• The maximum loan available
• Your ability to meet the repayments
