Choosing the right mortgage is incredibly important for you and your family. Here at Parkway, we understand the vast choice of mortgages is often daunting and understand the wrong decision can cost you money and significantly impact your family’s future.
Therefore, we have created this blog to give an overview of all the major mortgage types currently available on the market to help guide you in your choice. However, before you commit your, and your family’s, future to a mortgage we would always recommend speaking to the experts. We are on hand to help and assist you navigate the often-confusing world of residential mortgages.
These are the most common mortgages selected in the UK. They are often disguised with various names, but the premise of these mortgages is always the same. They follow the simple practice that you accept a loan (with interest on it) and agree to pay it back over a long period of time. This could be anywhere up to 40 years depending on your circumstances and finances.
Interest Only Mortgages
Whereas virtual all other mortgages work on the concept that the entire loan is repaid, interest only variants are different.
As the name suggests, interest-only loans work on the idea that you are only paying back the interest on the mortgage each month. This is great on a monthly basis when you see how little you will have to pay every month, but you’ll still be liable for the full amount borrowed when the term comes to an end. This means that you need to be 100% certain you will have the money to hand once your loan period ends, otherwise you could be forced to sell your home.
Fixed Rate Mortgage
In times of uncertainty (Brexit, Covid, etc), fixed rate mortgages are incredibly popular. They offer a fixed interest rate and therefore payback amount every month. This allows you to have control over your money with a regular, expected payment. The downside is you will pay slightly more to lock in these rates every month and will not benefit if interest rates fall during your contracted period.
Tracker mortgages are similar to the variable rate options but a little more rigid in design. They are created to follow a designated interest rate by a certain percentage. These are also normally tied to the Bank of England base rate so once again you are exposed to movements from our central bank.
First-Time Buyer Mortgages
The current UK government are extremely keen on our country becoming a nation of homeowners. This means we could write an entire blog on the many variants of first-time buyer mortgages (and we probably will!). If you are a first-time buyer, it is worth calling us to discuss the options available, especially the ever popular “Help to Buy” scheme.
Our final mortgage type is completely different as it is for those individuals that wish to purchase an investment property and rent to others. It is worth understanding that how these loans are calculated is completely different to all other types of mortgage as they must take into greater account other factors such as your circumstances, the prospective rental value of your new property and other leading indicators.
We hope this guide is useful, but we are sure it will create even more questions than it answers. Therefore, we would invite you to get in touch with one of our knowledgeable experts who can assist in picking you perfect mortgage. Call us today on 0800 001 6136.