The Best Mortgage for You
16th January 2019
16th January 2019
Currently, mortgage rates are incredibly low and there are plenty of great deals out there for anyone with a mortgage – or those hoping to obtain a mortgage.
A mortgage is a big financial commitment for you and probably the largest amount of money that you will ever have to borrow. It’s therefore imperative that you understand what the different types involve so that you get the one that is best suited to your needs.
This week’s blog, courtesy of Maddisons Residential in The Pantiles, is here to help you choose.
Mortgages fall into two categories:
• Variable Rate
• Fixed Rate
Within Variable Rate Mortgages, there are two main types:
In a nutshell, your mortgage will “track” the Bank of England base rate and most lenders will add 3-4% onto that. So, at the present rate, your mortgage could be as low as 3.25%. These can be set up with an introductory deal period which then leads onto the lender’s variable rate or you could have a lifetime “tracker” where your mortgage will track the Bank of England rate for its duration.
The lender will have a standard variable rate which you will pay with a fixed discount. So, if your lender’s rate was 4.5%, you might pay 3% with a 1.5% discount.
These deals can be in steps whereby you pay a certain amount for a period of time, for example it might be at a lower rate initially and then at a higher rate after a year or two. There is usually an amount that the rate can’t fall below or can’t go above.
Here, so that you know exactly where you stand, you will pay the same interest rate for the entire period, irrespective of what goes on with interest rate changes.
There are other types:
• Interest Only
• Cash Back
Interest Only mortgages are rare in today’s environment but here you pay just the interest and none of the capital, whereas with Repayment you pay off some of the borrowed money.
With Flexible, the word is key! You have the opportunity to over-pay or to underpay, take holidays or make withdrawals.
Cash Back mortgages, as they imply, let you take cash back when you take them out. This is to cover expenditure when you move. However, these may not be the cheapest!
At award-winning Maddisons Residential in The Pantiles they sell houses throughout Kent and Sussex and would be delighted to arrange for you to speak to their experts in arranging mortgages. It’s all part of their exceptional service. Please call them on 01892 514100 to discuss.