CHOOSING THE RIGHT MORTGAGE
Whether you are a first-time buyer, looking to remortgage, or letting a property there are many different kinds of mortgage deals available. Many people find mortgages confusing and it is not surprising given that there are thousands of deals to choose from. What is more, this is compounded by the fact that given the size of the loan it is important to get the decision right.
FIXED RATE MORTGAGES
These mortgages charge a fixed rate of interest for a set period of time. They can provide financial certainty but are not always the cheapest option.
VARIABLE RATE MORTGAGES
The rate on these mortgages can go up or down and therefore monthly payments can change over time. There are two types of variable rate mortgages – discounted and tracker.
STANDARD VARIABLE RATE (SVR)
This is the mortgage interest rate that most products default to after the introductory fixed, tracker or discounted deal period ends.
Interest can be charged in one of two ways:
The monthly repayment is made up of both the interest bill and a contribution to repaying the debt. This means that in the full term the full balance will have been paid off.
INTEREST ONLY MORTGAGE
The monthly payment is for the interest only. So after the full term, the original loan (often called the “principal loan”) will still need to be paid off.
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