Mortgage Types
Fixed Rate Mortgage
A fixed rate mortgage means you fix your rate for an agreed period of time with a lender. They vary in fix rate periods from 2, 3, 5, 7 and 10. Fixed rate mortgages can be popular to allow you to budget monthly, it allows you to have peace of mind to know the exact monthly payment during the fixed rate period. Most lenders will also allow you to overpay the mortgage around 10% per year, allowing some flexibility.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
Tracker/Variable Mortgages
A tracker or variable rate mortgage means your monthly payments can change month on month, depending upon the rate your mortgage is tracking (typically the Bank of England Base Rate). These type of mortgages will allow you to benefit from when rates are decreasing immediately while also having some additional flexibility on overpayments. The downside to these mortgages means if rates do increase your payments will do too.
Repayment Mortgages
Repayment Mortgages mean you will pay interest and capital to your lender. Gradually your mortgage will reduce allowing you to build up equity. At the end of your mortgage term as long as you keep up the repayments, your mortgage will be repaid at the end of the term
Interest Only Mortgages
Interest only mortgages consist of you only paying the interest part of the mortgage. The monthly costs are lower, however it is your responsibility to ensure an adequate repayment method is in place. The repayment method would need to clear the mortgage at the end of the mortgage term.