Debt Advice Apply Easily Online Today !

What are the Different Types of Mortgage available ?

These days there are a wide range of mortgages available to you depending on your current circumstances. Below is a list of just some of these.

Interest only
Only the interest will be paid off with each mortgage payment. One of the biggest differences between this and a repayment mortgage is that the monthly repayments are not going towards paying any of the outstanding balance.

Endowment Mortgages
An endowment mortgage is a form of interest only mortgage but has an additional savings plan such as an endowment policy. With this type of mortgage you will make a monthly contribution to a Life Insurance Company who will then invest this into the savings plan. The reason for having this life insurance is to repay the mortgage should you die before the policy matures.

Fixed rate
This type of mortgage means that your repayments are fixed for a set period of time at the beginning of your mortgage. You will not be affected by any changes to the lender's standard variable rate or the Bank of England's base rate during the fixed rate term.

Variable Rate Mortgage
This will be based upon the lenders standard variable rate, which is often affected by changes to the Bank of England's base rate. Typically the standard variable rate will be 1.5%– 3.5% above the Bank of England’s base rate.

Tracker rate mortgage
A tracker rate mortgage will follow the changes in the Bank of England’s base rate at an agreed degree of difference. It is available for a fixed period or the length of the loan. Once the set period of time has finished, the mortgage changes to the lenders standard variable rate.

Capped rate
This means that the interest rate will not go above a particular level for a set duration of time from the beginning of your mortgage.

Standard variable rate
The repayments that you make will change in line with changes to the Bank of England base rate.

Repayment Mortgages
This type of mortgage sees repayments made over a set number of years with interest, meaning that you will be repaying some of the original sum and the interest. Over time you will pay off more of this capital per month and a reducing rate of interest.