Which mortgage option is right for you?Struggling to figure out which mortgage is right for you? That’s what we’re here for! In this guide, we’ll talk about each of the mortgage options and prepare you for your mortgage appointment.
Before we start, it’s important to understand the potential effect of the Bank of England (BoE) Base Rate. This is set by the Bank of England’s Monetary Policy Committee every six to seven weeks. With the change in rates, there is a change in borrowing too, which is important to know when looking into mortgage options!
Fixed Rate MortgagesFixed-rate mortgages typically run for two, three or five years, with longer periods also being available with some lenders. With these mortgages, your payments stay fixed, which means when the BoE base rate changes, this won’t affect your monthly payment. A fixed-rate mortgage is great for protecting you from market fluctuations but this also means you won’t benefit from any BoE decreases. Keep in mind that ending your mortgage deal early may be subject to early repayment charges.
Variable Rate Mortgages – Tracker mortgagesA variable rate mortgage, named tracker mortgage, follows and tracks market fluctuations. This means that your monthly payments may vary – typically in line with the BoE Base Rate announcements. Your tracker mortgage payments would be based on the following: the current base rate (4.25%)* plus additional interest from the lender (e.g. 1%). For example, your payment here would be at 5.25% (4.25% base rate + 1% tracker).
With this mortgage, your monthly mortgage payments will benefit when rates go down but when the rates go up, your payments will too...
Variable Rate Mortgages – Standard Variable Rate (SVR)Most Standard Variable Rate mortgages follow the Bank of England Base Rate, but this may not always be the case. Lenders can set the rates individually, so this can vary from mortgage providers. SVRs tend to cost more than fixed or tracker mortgages, but you have more flexibility in terms of being able to switch offers without having to pay additional charges.
What mortgage deal suits your needs best?Now you know your options, it’s time to weigh up which mortgage is better suited to your lifestyle… With one of our qualified Mortgage Consultants, you can discuss and receive advice based on your personal circumstances and compare thousands of deals from a panel of carefully selected lenders to help find the mortgage that suits you best. We’re here to help you every step of the way.
Speak to a mortgage consultant to make sure you are on the right deal for you.
Correct at the time of publishing – 14/03/23
Articles used for research: Mortgage types explained: fixed, variable or tracker - MSE (moneysavingexpert.com)
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