Mortgage Information

When buying a home, most people do not have enough cash on hand so they need to apply for a mortgage. A mortgage can quite possibly be the largest financial decision you will ever make. Making things even more complicated, there are many different types of mortgages. You may want to meet with a mortgage broker that can do the research for you and come up with the best type for your situation. Most of the mortgages in the UK are fixed rate mortgages. It is important to learn about capital and interest when paying your mortgage.

Fixed rate mortgages allow you to lock in an interest rate for a specified period of time. Generally, the longer you have the loan the higher the interest will be.

A variable rate mortgage can fluctuate greatly depending on the economy. This type of mortgage can be unpredictable and risky.

Discount mortgages are very popular in the UK. This is when a lender offers you a certain percentage off of the standard variable rate. This is typically for one to three years but can be longer depending on the lender.

Capped rate mortgages are quite similar to fixed rate with the exception being if the bank rate drops during your loan period, it will also make your mortgage go down temporarily.

Another decision will be if you want an interest only or repayment mortgage. This can be quite risky because you are not paying anything on the capital. You are paying into an Individual Savings Account or another investment in the hopes that it will generate enough return to pay off the capital.

Repayment mortgages ensure that you pay the lender some interest as well as some money towards the capital each month and at the end of the loan agreement you have paid the loan in full.

Whatever you choose make sure you do some research before you pick a lender.

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