There are several types of mortgage available on the market, which can make choosing the right one a daunting process. If you choose the right type of mortgage, you could end up saving thousands of pounds. However, the wrong type of mortgage could result in you paying far more than necessary.
A Standard Variable Rate mortgage should be the very last option for most borrowers, as you will pay the main rate which a lender is charging. Lenders can also change the SVR whenever they want to, which makes it much harder to budget.
A fixed rate mortgage is a popular option, as you will have a rate which is fixed for a specified number of years. This can be anything from two years to 30 in some cases. Although this makes it easier to budget for your mortgage payments, you could end up paying more if the interest rates fall. However, you will be protected from any interest rate increases. Some lenders offer a discounted rate of interest, although this can vary during the specified term.
Tracker rates are also a popular option for some people. You generally pay a specific percentage above the Bank of England base rate, either for a limited period or for the whole of the mortgage term. This means that if the Bank of England base rate goes down, you know that your monthly payment will also reduce. However, if the Bank of England decides to raise the interest rates, you could end up paying a much higher amount. A CeMAP qualified mortgage adviser will be able to help borrowers decide which is most suitable.
