Mortgage Types

There are many mortgage types available and to help make things a little easier for you we have put together a list of the main types below.

Variable rate mortgages:

These follow, approximately, the base rate, with any changes usually being made on a yearly rather than a monthly basis.

Flexible mortgages:

As the name suggests, these give the buyer flexibility on payments, which may benefit you if you are first time buyer, self-employed or someone whose income can vary. If you have a surplus of money then there is the option to pay off more from the borrowed amount. On the other hand if you are financially stretched, you can take a payment holiday or make underpayments. These deals will ensure that no early repayment charges are incurred.

Fixed-rate mortgages:

You pay back a set amount each month regardless of the Bank of England’s interest rate. This is a good option if you are working to a strict budget and generally for those people who like to know exactly how much they are going to repay on their mortgage each month.

Tracker-rate mortgages:

Tracker rate mortgages work by following the Bank of England base rate while remaining a certain set amount above it. Unlike variable rates, these do move in line with the base rate.

Capped rate mortgages:

Capped rate mortgages mean that the interest paid is linked to movements in the base rate, but cannot go any higher than a previously specified amount. This can give you the best of both worlds.

Shared mortgages:

Certain lenders specialise in mortgages for groups of people (often friends) enabling each individual to own a share of a property based on their salary, deposit and outstanding debts. Each member of the group can then take their equity when the property is sold.