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Mortgages

When you choose a mortgage, you′ll need to think about the repayment method, interest rate and special features.

The best one for you will depend on your needs and circumstances, so it′s important to understand your options.

We have expert advisers on hand to help you through the decision making process, but in the meantime here′s our guide to the mortgage options available.

Quick Start Mortgage Guide

There are two main ways to repay your mortgage - these are called ′repayment′ and ′interest-only′.

Repayment mortgage

With this type of mortgage (also known as capital and interest) you repay part of the amount borrowed together with the interest being charged each month. In the earlier years the majority of your monthly repayment is made up of interest, however toward the latter part of your mortgage term the situation is reversed with the majority of your monthly payment reducing the amount borrowed.

Interest-only mortgage

With this type of mortgage you are only paying interest each month. This means that although your payments will be lower, the amount you borrowed will still be outstanding at the end of the mortgage term. You′ll need to make alternative arrangements to pay off the mortgage to avoid the property having to be sold.

Types of mortgages available

Lender′s standard variable rate - Take the rough with the smooth
Your payments will rise and fall in line with Bank of England base rate changes but not necessarily at the same time or by the same amount.

Discounted variable rate - A gentler way to start your mortgage at a time when money may be tight. You pay a lower interest rate which moves in line with the lender′s standard variable rate for a set period.

Tracker variable rate - Your payments change when interest rates fall or rise
Tracker rates are usually linked to the Bank of England base rate, which means they′ll change in line with changes to the base rate.

Fixed rate - Gives you the security of knowing that your monthly payments are the same
You pay a fixed rate of interest for a set period, so you know exactly what you′ll be paying each month even if interest rates change.

Capped rate - You will know the maximum you will pay for a set period of time to help you budget
You pay a variable interest rate, but your payments won′t go above a certain amount for a set period of time.

Offset mortgage - You pay less on your mortgage as your savings go up
Your main current account, savings account or both are linked to your mortgage. Each month, the amount in these accounts is offset against your outstanding mortgage before working out the interest you owe. You are unlikely to earn interest on your savings which are offset against your mortgage.

Cash-back mortgage - Great if you need a cash lump sum
The lender pays you a sum shortly after you take up the loan but if you move to another lender in the early years you may have to pay some or all of this back. Typically interest rates are higher for this type of mortgage.

Flexible mortgage - Great if you have a variable income
You can vary the amount you pay each month and take payment holidays in some circumstances. It may help to reduce your mortgage with lump sum payments without incurring an early repayment charge.

One of our expert mortgage advisers will help you through the process step-by-step, working out how much you can borrow, how much it will cost, and what type of mortgage may be most suitable for you.

They will even take care of all the mortgage paperwork for you, so you don′t need to worry about a thing.