Types of Mortgage
It used to be simple, there was only one type of mortgage - a 25 year mortgage at the Building Societies' Standard Variable Rate.
You saved for about 3 years to get your 10% deposit, and your Building Society manager, having thus determined your financial stability, would sanction a loan of up to 3 x your income.
You had a choice of the method of mortgage repayment - either interest only with a seperate Endowment Policy, or a repayment mortgage.
Endowment policies were of the Full Endowment variety, whereby, provided premiums were maintained to maturity, the policy GUARANTEED the repayment of the outstanding loan. They were very expensive, and for this reason, repayment mortgages were the norm.
Things began to change in the mid 1970's with the introduction of the (now) much maligned LOW COST ENDOWMENT POLICY. This made the two methods, roughly equeal in monthly cost, and over the years, the endowment mortgage gained in popularity.
Also around this time, after the economic stability and low inflation of the post war years, rising prices were having a severe economic impact. With rising interest rates, borrowers required some means of knowing that they would be able to meet their mortgage payments from the outset. Enter the fixed rate mortgage.
- fixed rate mortgages
Fixed rate mortgages - The main advantage of a fixed rate mortgage is, as the name suggests, known certainty of mortgage payment.
- standard variable rate mortgage
Standard variable rate mortgage - The Standard Variable Rate (SVR) Mortgage refers to the rate that applies, in the abscence of any preferential rate for the borrower.
- capped rate mortgages
Capped Rate Mortgages - What if then, a mortgage could be designed, so that your payments never increased, even if mortgage rates did, yet reduced, if mortgage rates fell.
- base rate tracker mortgage
Base Rate Tracker Mortgage - Track the bank of England Base Rate, plus or minus, a stated percentage.
- discounted mortgages
Discounted Mortgages - One of the simplest of schemes to understand. The lender offers a discount off their standard variable rate for a given period of time.
- buy to let mortgage
Buy to Let Mortgages - Buy to Let - The advantages
The attraction of owning rental properties is obvious.
You own, albeit with a mortgage, a tangible asset
You collect rental income
- let to buy mortgage
Let To Buy Mortgage - Once a specialist mortgage for people who wanted to retain their existing residential property for rental, whilst at the same time purchasing a new property to live in.
- remortgage quotes UK
Remortgage Quotes UK - A remortgage is the process of paying off the loan provided by your existing mortgage lender, and subsituting it with a loan from another lender.
- self certification mortgages
Self Certification Mortgages - The self employed and those who run small Limited Companies (generally treated as self employed by lenders) had traditionally had a hard time obtaining a mortgage.
- adverse credit mortgages
Adverse Credit Mortgages - Mortgage applicants who have had previous adverse credit present greater risk to mortgage lenders.
- first time buyer mortgages
First Time Buyer Mortgages - First time buyers no longer receive preferential treatment from mortgage lenders.
- interest only mortgages
An interest only mortgage means that the loan has been set up on the basis that you are only obliged to make interest payments on the loan, without repaying any capital.
- repayment mortgages
Repayment mortgages are the "traditional" type of mortgage. Each monthly payment that you make to the mortgage lender covers the interest charged, and also repays some of the capital borrowed.
- cashback mortgages
Cashback Mortgages - Initially, the purpose of the cashback was to enable the buyers - usually first time buyers, to furnish the property and make improvements. Very quickly buyers realised the possibility of using the cashback as a deposit
- 125% mortgages
125% Mortgages - Not very long ago, obtaining a 100% mortgage was tricky. What's more, the fees were punititive.
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