Difference between repayment and interest only
There are many schemes offered by mortgage lenders from which you as a prospective borrower can choose.
These can be divided into two broad methods of repayment:
Capital and Interest method: –
With a capital repayment mortgage, the capital and interest elements of the loan are paid off with each monthly installment, with the balance reducing over the length of the loan.
Therefore by the end of the mortgage term, assuming all mortgage payments are made, you have paid off the balance in full and you therefore own your property outright.
Interest only method: –
With an interest only mortgage the balance of your mortgage stays the same throughout the mortgage term. Interest and usually a premium in a suitable investment vehicle are paid monthly.
At the end of the term, the proceeds from the investment vehicle are intended to repay the mortgage. This amount will depend on the performance of the investment vehicle.
If you do choose an interest only mortgage you are responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term
If you need any more information, then simply speak to an expert today.
What are the different types of mortgage products?
Broadly speaking, there are four types of mortgage products available:
Fixed:
This is a mortgage rate where the interest rate is agreed at the start of the mortgage and will not change during the term of the fixed rate. So you know exactly how much your monthly payments will be each month during the fixed rate period.
Discounted:
A discounted rate mortgage offers you reduced repayments for a given term. This interest rate is discounted from the published bank standard variable rate, for an agreed period from the start of the mortgage.
What this means for you the borrower is that you are guaranteed to pay a set amount below the standard variable rate for the period of the discount. The standard rate can go up and down, but the discount amount remains fixed during the agreed period.
Tracker:
This is a variable rate mortgage where the interest rate is linked directly to the Bank of England Base Rate. Therefore when the Base Rate changes, the rate on your tracker mortgage changes by the same amount.
Capped:
This is a type of loan where a maximum rate of interest is set at the start of the mortgage term. During the capped rate period the interest rate can fall below the capped rate but will never rise above it.
What this means for you the borrower is that you know how high the mortgage payments could rise but are guaranteed the rate will not go any higher, therefore making home loan budgeting easier.
If you need any more information, then simply speak to an expert today.
What will happen if the Bank of England Base Rate rises?
This will depend on what type of mortgage product you have chosen:
Please refer to the mortgage type’s page for more details.
If you need any more information, then simply speak to an expert today.
Option to purchase my council property
A wide range of lenders provide right to buy mortgages so your first step should be to contact us today, and we will run through the mortgage options available to you.
In the meantime we thought you may find the following information on right to buy useful.
You may be eligible to qualify to buy your council home if you are a secure tenant of either; a London Borough council, a district council, a non-charitable housing association, or a housing action trust.
Discounted rates are usually offered to council tenants for their homes. So if you are a council tenant wanting to buy your home, the rate you will pay will depend upon how long you have lived there. The amount of discount you will receive is roughly in proportion to the number of years you have been paying rent.
Once you have received the right to buy your council property, you need to think about how much you would like to borrow and how much you can afford to borrow. Some borrowers like extra monies for home improvements. Most lenders will allow the client to borrow enough for the discounted purchase price and a set amount for home improvements subject to affordability. All borrowers will need to be on the right to buy papers.
If you need any more information, then simply speak to an expert today.
I want to build my own house
There are a range of lenders available who provide flexible mortgages for self build renovations and conversions. Money is available when it is needed – at the start of each stage of the build. This positive cash flow allows the build to progress more quickly and money in advance ensures that you can negotiate the best prices for material and labour.
So, contact us today and we will run through the self-build mortgage options available to you.
If you need any more information, then simply speak to an expert today.
What is a mortgage?
In a nutshell a mortgage is a type of loan used to buy a property. This loan is usually taken out with a lender, such as a bank or building society. If you need any more information, then simply speak to an expert today.