Mortgages
Taking out a mortgage is probably the biggest financial undertaking you will ever make. Naturally, you will want to know which mortgages are the best ones. As we at Kent Insurance Services are totally independent, we are able to offer whole of market advice to assist you with your residential house purchase or buy-to-let mortgage requirements. Our system is updated daily enabling us to access the latest and finest deals available.
This means you may be able to benefit from the most competitive rates available, saving you money!
Please find below information about the various types of mortgages available:
Variable Rate
With a variable rate mortgage, the interest rate you pay can vary, moving up and down over time.
Every mortgage lender has a Standard Variable rate that is loosely based on the Bank Rate; the benchmark interest rate set by the Bank of England.
Each lender sets its own SVR, usually 1% to 2% above the Bank Rate. So where the Bank rate is 5.25%, a lender's standard variable rate may be 6.25%, 7.25% - or higher in some cases.
Fixed Rate
Fixed rate mortgages are very popular in the UK. As the name suggests, they allow you to fix the rate of interest you will pay on your mortgage for an agreed period. Most UK mortgage lenders offer a range of fixed rate mortgages. The most popular fixed rate mortgages are 2 year, 3 year and 5 year deals, but it is possible to get a fixed rate mortgage for anything from 6 months to 25 years.M
As a rule, the longer you fix your rate for, the higher the interest rate you can expect to pay. However, as this market is so competitive, 2, 3 and 5 year deals are sometimes available at very similar interest rates.
Tracker Mortgages
This type of product follows the Bank of England Base Rate or the lender's Standard Variable Rate, plus or minus a certain percentage. For example, if your two-year tracker has a rate of Base Rate plus 0.5%, if the Base Rate is 5%, your product rate will be 5.5%.
However, if the Base Rate drops to 4.75%, your rate will also fall to 5.25%. If your mortgage tracks your lender's SVR it may not necessarily change in line with the Base Rate, however a Base Rate tracker is guaranteed to. It is also possible to get mortgages that track other rates, such as LIBOR (London Interbank Offered Rate; the rate at which banks lend to each other), but these products are nowhere near as common. Interest Only vs Capital Repayment: Before you go looking for a mortgage or remortgage deal, you need to decide how you are going to pay off your mortgage. Should you go for the safe repayment-type model, or opt for an interest-only method of repayment?
Your Home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Services Authority does not regulate some aspects of buy-to-let arrangements.
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