What are
they?
There are many types of ‘Rate Options’ available and Lenders
are increasingly offering more choice. It is important to choose the Rate
Option’ that most suits your circumstances. Our Advisers will always
consult with you and help you decide the type of mortgage that best suits
your needs.
With many deals, an arrangement fee may be charged by the lender, and
an early repayment charge may also apply. Full details will be supplied
by our Advisers to help you understand the full costs involved.
Here are brief explanations of the various mortgage schemes available.
Variable rate
- Your monthly payment may fluctuate in line with any changes in the base rate.
- The interest rate charged by your lender is largely influenced
by changes to the Bank of England base rate.
- Some lenders will adjust your payment as the rate changes.
- Other Lenders review annually and adjust accordingly.
- Early redemption penalties may apply
Capped rate
- Similar to a variable rate, however your rate will not exceed
a specified upper limit for a fixed period, even if interest rates rise
beyond that point.
- Capped rates are usual applied for a fixed period (Typically 2-5
years)
- This product allows you to take advantage of interest rate cuts,
with the security of a maximum rate payable, should rates rise.
- Early redemption penalties may apply. Please ask for a personalised
illustration
Fixed rate
- Allows you to fix your rate for a specified period of time.
- Ideal for those who need to budget carefully and who need to know
what they will be paying each month.
- Terms are normally available for periods between 1-25 years.
- Generally the shorter the term of the fixed rate, the lower the
interest rate.
- At the end of the fixed rate period, some lenders will offer an
extended fixed rate, whilst others will revert to their standard variable
rate.
- Early redemption penalties may apply. Please ask for a personalised
illustration
Discounted rate
- For an agreed fixed period, the lender will apply a discount
off their standard variable rate.
- Discounted mortgages will help to keep your payments lower for
a period but will still fluctuate up or down if rates change
- Typically discounts are available from 1 – 5 years.
- Generally, the shorter the discount period the larger the discount.
- Your monthly payment may fluctuate in line with any changes in
lenders standard variable rate.
- Early redemption penalties may apply.
Flexible mortgage
- May allow you to vary your payments within given parameters.
- Payment holidays may also be a feature with some lenders.
- Overpayments are also allowed, which can help to pay off your
mortgage earlier and/or lower the monthly payments
Cash back mortgage
- You will receive a cash lump sum usually following completion
of your mortgage.
- This can be an agreed percentage of the amount that you borrowed,
or a fixed amount.
- You may have to pay back some or all of the cash on early repayment
of the mortgage.
Base rate tracker
- Your monthly payment may fluctuate in line with any changes
in the base rate.
- The lender agrees to link your rate payable to the Bank of England
base rate.
- This can either be in the form of a loading or of a discount for
a set period.
- The Bank of England review their base rate monthly, although the
reviews do not necessarily result in a change of rate.
- Early redemption penalties may apply.
