How to choose the right mortgage for you…Back to all blog posts
How to choose the right mortgage for you...
A brief overview...
With so many mortgages to choose from, it seems impractical to do extensive research on absolutely all of them – we don’t have all the time in the world! To help you consider your mortgage options and see what works for you, we’ve put together a brief overview of a few different types of mortgages:
Standard Variable Rate (SVR) mortgage
Getting this mortgage means your interest rate will be prone to shifting up and down. The interest rate you pay is decided by the lender and isn’t affected by the rises and falls of the Bank of England. This also means your monthly payments can vary depending on the interest rate at the time.
For a period of time (usually about 2-5 years), your interest rate is fixed, meaning you can have more certainty about your monthly payments during that time. After this period, the interest rate will usually just default to the lender’s SVR.
These rates are another type of mortgage that has a limited time frame (usually 2-5 years again). This type of mortgage tracks the base rate set by the Bank of England, with a margin set by the lender. While you’ll have to deal with inconsistent repayment amounts, the change is more observable.
Discounted Rate mortgage
This type of mortgage gives you a discount on the lender’s SVR for an agreed period of time (usually 1-5 years). This then switches to a regular SVR mortgage after the agreed-upon time frame passes. This option might be best if you’re tight on money at first but are expecting your income to increase later down the line.
Capped Rate mortgage
This mortgage allows you to have a capped interest rate for a period of time, after which your rate will convert into an SVR. Whilst this means your repayments can still fluctuate, you have more certainty over what to expect and can budget accordingly.
An offset mortgage allows you to offset your savings against your mortgage balance, so you only pay interest on the net amount. Offset mortgages tend to have higher interest rates than other types of mortgages.
We hope this was useful and that you can find value in its contents! Getting a mortgage doesn’t have to be complex and confusing – it should be as straightforward as possible to save you time and energy to focus on other things. If you’d like to save a bunch of time and effort in acquiring your mortgage, get in touch with our team today, we’re always happy to help!