MORTGAGES

What Mortgage Do I Need?

1. Fixed Rate

A fixed rate mortgage means the interest rate stays the same during a set period of time, usually between 2 and 5 years – although some lenders offer fixed rates of 10 years or more. This stability can be great if you like the certainty and peace of mind knowing that your mortgage payments will stay the same.

2. Tracker

A tracker mortgage charges an interest rate that is usually a few percentage points higher than the Bank of England’s base rate. The mortgage will then “track” the base rate, which means that your monthly payments could rise and fall in line with any changes.

3. Discounted Variable Rate

A discounted variable rate mortgage is similar to a tracker mortgage, but rather than being linked to the Bank of England’s base rate, it is set at a fixed percentage below the lender’s standard variable rate (the SVR). The mortgage will then follow the lender’s SVR, and your payments could rise and fall, depending on how their SVR changes.

4. Standard Variable Rate

A standard variable rate mortgage follows the lender’s SVR, without any discount. You’ll automatically go onto this type of mortgage at the end of any introductory fixed, tracker or discounted deal.

5. Interest Only

An interest only mortgage is one where your monthly payments will only go towards paying the interest charged on the loan each month. Because of this, interest only mortgages can be cheaper – but the payments don’t go towards paying off the loan. At the end of the term, you’ll have to pay back the full amount you have borrowed in a lump sum. Most people do this through the sale of the property or by using an investment.

6. Offset

An offset mortgage is linked to one of your savings accounts – the amount you have in the account is offset against the amount you owe on your mortgage each month, lowering the total interest you’re charged on your monthly repayments. You won’t earn interest on any account linked to your offset mortgage.

KEY THINGS CONSIDERED FOR THE BEST MORTGAGE DEAL

Rates

A fixed mortgage rate can offer peace of mind with a guarantee of what your monthly repayments will be over a set period of time which means financial planning can be easier although a tracker could be cheaper overall. It’s important to consider what suits your financial circumstances and attitude to risk.

Fees

Always consider what fees are attached to a mortgage deal, they can add considerably to the overall cost. Don’t forget to factor in the length of the initial term too as there is likely to be an early repayment charge if you want to leave early before that term is ended.

Credit Rating

Credit rating can have a BIG impact on what mortgage deals, and rates, you will be able to access. It’d be savvy to check your credit report before applying for a new mortgage so you can take steps to improve your rating where possible. Simple things such as getting on the electoral roll can help.

Compare Deals

By speaking with A&A Mortgages we can compare the whole of market to find the deal that suits your needs – often getting access to unique and discounted products you wouldn’t get directly with lenders or through other brokers! Whether you’re looking to buy or remortgage, we compare deals across the market to source the right one for you.

MORTGAGE FAQS

What is a mortgage?

A mortgage is a loan that is mainly used to buy a home. To get a mortgage, you will need to be earning enough to afford the repayments, and you’ll also need a deposit. A deposit is a percentage of the property’s value, which you can put down in cash.

How much deposit do you need for a mortgage?

In most cases, you’ll need a 10% deposit to get a mortgage – although some lenders offer mortgages with a 5% deposit. Generally, the more you can put down as a deposit, the better, as it means you’ll have to borrow less and interest rates become cheaper.

A mortgage is secured against your property – so you should remember that if you fail to keep up with your monthly repayments, the property could be repossessed, putting your home at risk.

In most cases a 10% deposit of the property value is required for a residential mortgage, however it is possible to get on the property ladder with a 5% deposit. There are plenty of benefits to saving a bigger deposit, they are:

• Cheaper monthly payments – for capital repayment mortgages the less you borrow, the less you back
• Better mortgage rates – lenders give better mortgage rates for those with higher deposits
• More chance of getting accepted – lenders perform affordability checks, the higher your deposit the less your monthly payment will be
• Lower risk – if you’re property equity falls, there’s less chance of you owing the lender in the long term

Can I get a mortgage with bad credit?

Yes, you can still get a mortgage with bad credit. You may not get access to most competitive rates, but it’s definitely still possible. Lenders will look at your payment history, so any missed payments or CCJs in the past will work against you.