Here are some of the more common types of mortgages:
Fixed Rate Mortgage
A fixed-rate mortgage means that the interest rate will stay the same for a set of time usually between two to five years
This can offer peace of mind because, unlike a variable-rate mortgage, you’ll know exactly how much you’ll need to repay each month during this period.
When the fixed rate period ends, your rate will change to the lenders standard variable rate (SVR).
Standard Variable Rate Mortgage
A standard variable rate is a type of variable-rate mortgage, meaning the total amount that you pay could change each month. This means that some months you may find that you end up paying more than you expect and some months you end up paying less.
Standard variable rate mortgage rates don’t have a lock-in period or some of the other restrictions you might get with a fixed-term mortgage.
When on an SVR mortgage, you won’t normally have to pay an early repayment charge if you want to pay off your mortgage sooner or remortgage to a new deal.
Tracker Mortgage
A tracker mortgage is a type of variable mortgage. Your monthly repayments could vary depending on the base rate.
Tracker mortgage follow the Bank of England base rate during a specified period, if the Base Rate rises, your payments will rise accordingly. However, if they fall, so will your mortgage repayments.
If you have a tracker mortgage, the amount of interest you pay on your mortgage might be the base rate plus or minus a certain percentage.
Discount Mortgage
A discount mortgage has an interest rate that is set a certain amount below the lender’s standard variable rate (SVR). It goes up and down when the SVR moves.
A
discount mortgage is a type of variable-rate mortgage, meaning the amount you
pay could change from month to month.
Discounted
variable rate mortgage deals usually last between two to five years or it could
even be for the entire term of the mortgage. Once the deal ends, you’ll be
moved to the mortgage provider’s standard variable rate.
Offset Mortgage
Offset mortgage links your savings accounts with your mortgage, helping you to reduce the mortgage term or your monthly mortgage payment.
The Offset savings account is linked to the Offset mortgage to reduce the amount of mortgage interest you are charged.
Your savings are not used to pay off your mortgage. Instead they sit in a separate savings account that pays no interest.
Lenders deduct this amount from your mortgage balance and only charge you interest on the remaining amount.
SN Mortgage Solutions are independent mortgage brokers working with a wide range of lenders who can advice on the entire process and provide quality advice.
Kindly contact us on 07551418599 or email us at sujatha@snmortgagesolutions.co.uk to book your free initial consultation.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.