Traditional Types of UK Mortgages

Getting a mortgage can be a daunting thing and it is never a good idea to go into unprepared, here is a little guide that should help you out whether you are looking for first time buyer mortgages or you are moving on to a new bigger and better house and need a bigger mortgage to go with it.

Fixed 2 year mortgages

One of the most popular options that customers opt for is the fixed 2 year mortgage. With this option you can be assured that the interest rates will remain frozen for two years, regardless of if interest rates increase in the meantime. This means you can budget your household expenditure with certainty.

Fixed 3 year mortgages

Another fairly popular option for those looking for a standard of security in their monthly payments. If you believe that interest rates are set to rise and are confident in your financial security in the coming years, fixed rates are always worth considering. However the rates on three year mortgages might be marginally higher than two year fixed rates, but the fees charged are similar. Fixed rates are ideal for calculating a budget around future life events or expenses that will fit into place with the terms of the mortgage, such as if you plan to take extended periods of time off to start a family or pursue further education.

Fixed 5 year mortgages

This is almost always the longest period of time you will find for a fixed rate, it offers a greater period of repayment stability gained by taking on longer term commitment. The benefit as well is that you would no longer need to seek a new mortgage deal every couple of years, as you have to do with a 2 or 3 year term fixed rate.

Variable rate Best Buys

A Variable rate mortgage covers many types of mortgage; this includes discounted variable, standard variable or tracker rate type deals. The interest rate you pay on all of these options has the potential to increase or decrease. This is a better choice when interest rates are low; however you will pay more if interest rates increase. Almost every lender will offer a standard variable rate (SVR) mortgage. Because of the potential volatility of this option the initial fees associated with an SVR mortgage are relatively low. Most lenders offer a tracker rate mortgage as another option. These rates increase/decrease based on the changes to the Bank of England base rate.

Buy to let mortgages

But to let mortgages are not intended for properties which you would live in yourself, and instead are meant for properties which have tenants who will pay rent to whoever owns the property. In almost all cases, the amount you can borrow will be decided on a scale of how much rent you expect to receive for renting the property.

Discounted variable mortgages

Those interest rates that are payable to these mortgages are less than the lenders standard variable rate (SVR), but only for a specific grace period. Whilst discounted variable mortgage rates are less costly than an SVR, it being a variable means that it has the potential to alter and your monthly repayment will change if the main SVR increases or decreases.

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