Capped Rate

One of the more popular and common mortgage types is the capped rate mortgage. This particular mortgage type is a mixture of a fixed and variable rate. A major appeal of the capped rate option is the guaranteed that the interest rate is not to rise above a set level within the capped rate period. Even if the normal variable mortgage rate is below the capped rate then the variable rate is charged. This gives the 'best of both worlds' as the interest rate can fall but will not rise above the capped rate.

You can benefit from a fall in the Bank of England's base rate that leads to a subsequent fall in your lender's standard variable rate. At the same time you remove the risk of the interest rate increasing beyond a known level, allowing you to budget more easily. However, the downfalls include a strong chance the lender will normally impose early redemption penalties if the mortgage is redeemed within the first few years.

To see if this if this mortgage type is best for you then just fill in our application form and one of our many advisors will contact you within the next few hours.

Discounted Rate

A discount mortgage has an interest rate where a discount is applied to the lender's standard variable rate for a set period, usually from six months to several years. As the lender's standard variable rate moves up and down, so the discounted rate moves up and down by the same amount, with the differential between the two remaining the same.

Benefits include low interest in the first few years. This gives you an opportunity to invest the additional money into home improvement for example. This type of rate may interest a first time buyer. At the end of your discounted period your mortgage will switch to the standard variable rate. You may also be liable for penalties if you withdraw from your mortgage in the early discounted period.

To see if this if this mortgage type is best for you then just fill in our application form and one of our many advisors will contact you within the next few hours.

Cash Back

A cashback mortgage provides the applicant the option to receive a large payment to the mortgage applicant on completion of the mortgage. It is a scheme that is offered alongside other mortgage products. The cash can be used as you wish. This again may suit first time buyers. The benefits of the cash back mortgage include:

• The cash can be very useful at a time when you have just moved into a new home and provide you the opportunity not to worry to much about your finances in the early dew months.
• The money can be used to pay solicitor's fees, buy furnishings, carpets etc.
• You could even put the money into a savings account and use it to help in making mortgage repayments in the first few months.

Like the previous two mortgage rates you may be liable to pay penalties in the early redemption period. Also, depending on your lender, you may be tramped in an uncompetitive high rate.

To see if this if this mortgage type is best for you then just fill in our application form and one of our many advisors will contact you within the next few hours.

Interest Only

An interest only mortgage requires you to make monthly payments to the mortgage lender in order to pay off the interest on the amount borrowed. In addition to the interest only mortgage you need to establish a separate long term investment plan that will accumulate enough funds to pay off the full loan amount at the end of the repayment period.

The investment plan required to pay off the mortgage usually comes in one of three forms; an ISA (individual savings plan), a pension or an endowment. This investment does not have to be provided by the mortgage lender. The main advantage of this type of mortgage is that the investment plan will often grow faster than the rate it needs to simply clear the mortgage, any surplus is then paid back to the policy holder as a terminal bonus.

One of the disadvantages of this type of mortgage is how easy it is to stop paying into the investment at any time, without the lender being aware. This not only puts in jeopardy the means to eventually pay off the mortgage, but in the case of an endowment, also stops the built in life cover, thus putting your family (and you in the case of serious illness) at risk of repossession should anything untoward happen to you. It is always your responsibility to ensure that there will be sufficient funds to repay the capital at the end of the loan, otherwise you could lose your home.

To see if this if this mortgage type is best for you then just fill in our application form and one of our many advisors will contact you within the next few hours.

Pension Mortgages

Another form of an interest only mortgage is the pension mortgage. This offer's an additional investment plan for those you have a personal pension scheme. A personal pension is a stockmarket based investment that benefits from tax relief and tax free growth. A pension pays a tax free lump sum and a monthly taxed income on retirement. The lump sum is normally used to pay off the mortgage. There is also the benefit of a tax relief, from up to 40%, for the pension contributions for a sector of the higher rate of taxpayers.

Your debt will remain constant throughout your mortgage period and you may be required to be investing a life cover plan should you die before you retire. Also the lump sum cannot be used for other purposes. You therefore need to ensure that your level of pension contributions is sufficient enough to maintain your required standard of living during retirement.

To see if this if this mortgage type is best for you then just fill in our application form and one of our many advisors will contact you within the next few hours.

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