Getting the right type of mortgage is a vital aspect when buying your new property. There are many different types of mortgages available on the market for you to get your head round.
Some of the main types available are:
Standard Variable mortgages
Each lender sets their own SVR so they can vary considerably. Generally this means that if the Bank of England puts the interest rate up or down, your Standard Variable Rate (SVR) will almost certainly follow, though not necessarily simultaneously. If rates go down, you'll save. If rates go up, so will your repayments - so you need to build some flexibility into your budget if you decide to go for this type of mortgage. The main reason someone may consider this type of scheme is to avoid any early repayment charges if they do not anticipate having the mortgage for long.
This type of mortgage sets the rate you pay below the lender's SVR for a set period, for example two years or three years. If your discount is two per cent, when the SVR is seven per cent then your mortgage rate will be five per cent. If the SVR rises by one percent, your rate also rises by one percent. At the end of the discounted term, repayments go back to the SVR.
With this type of mortgage, the interest rate charged is linked to a rate such as the Bank of England base rate. It usually stays a set amount above or below this rate for the period of the loan. Some longer-term trackers also offer an initial discount. The benefit of a tracker, as opposed to a discount from the lender's SVR, is that if the Bank of England reduce the base rate then your rate will reduce simultaneously, whereas if you are discounted from the lender's SVR, there is no guarantee if, when and by how much the lender will follow suit, as they are not obliged to do anything. Tracker mortgages remove this conflict between you and the lender.
A fixed rate mortgage is a way of guaranteeing your payments for a set number of years. This means that whatever happens to the Bank of England base rate or the lender's SVR, your payments remain the same. If rates go up you will be better off and if rates go down you could be worse off, but the main benefit is you know what you need to pay each month and can more easily budget for it. Fixed rates can be from one year to the whole mortgage term. Generally, shorter term fixed rates are lower and more attractive, so shorter term rates of two to five years are the most popular.
" I have been dealing with Richard Poyntz for several years now and their professionalism teamed with their incredible level of customer experience has left me assured that my properties are in the correct hands. They offer an enormous amount of support and I feel very informed and supported by their dedicated staff, who are always fantastic at keeping me abreast of important progress updates and feedback as it is received. No question or request is too much for them and I feel very confident that I can reach out to them at any time with any question and have always received a concise and timely response. Having been a property owner and developer for many years, I have dealt with a lot of companies and can say without a doubt that Richard Poyntz have proven themselves time and time again to be the most incredible asset to the success of my projects."
Richard Poyntz & Company, 11 Knightswick Road, Canvey Island, SS8 9PA. VAT No: 731428745
Photos of Canvey by Terry Kent
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