Mortgages

We advise on a range of mortgages

Buying a home with a mortgage enables you to purchase a property over a set term, and you pay interest on what you owe. The monthly payment amount is determined by how much you’ve borrowed, the length of the repayment term and whether you’ve opted for interest-only or repayment.

Repayment versus Interest Only

A Fixed Rate mortgage enables you to pay a fixed rate of interest for a set period, providing piece-of-mind that your repayments will remain the same (regardless of whether interest rates increase for that period). The downside is that you will also be locked into your agreed rate if interest rates fall.

At the end of your fixed rate period, you can move to your lender’s Standard Variable Rate (SVR). Alternatively, you can switch your mortgage to another that is more suitable, but there is normally an early repayment charge to pay.

Variable rate mortgage

A Variable Rate mortgage uses a repayment model that can go up or down, which is typically influenced by the Bank of England’s base rate. Unlike a Fixed-Rate Mortgage, there is often no early repayment charge to pay when switching to another mortgage.

There are several types of variable rate mortgages available, such as Tracker, Discounted and Capped Rate.

A Tracker mortgage is based on an external rate (usually the Bank of England’s base rate), plus a preset percentage. If the base rate rises, your mortgage rate will go up by the same rate, and it will reduce by the same rate if it goes down. Most lenders will set a minimum rate under which your interest rate will never drop (also known as a Collar Rate), but there’s usually no upper limit as to how high it can go.

A Discounted mortgage offers you a set reduction on the lender’s Standard Variable Rate (SVR) for a specific period of time (usually 2-5 years). Your interest rate can still go up or down when the SVR changes.

A Capped Rate mortgage offers a variable rate that is capped at an agreed level by the lender, providing a guarantee that you never pay above the agreed rate. There is typically an early repayment charge for switching this type of mortgage before an agreed period of time.

Buy To Let Mortgage

A Buy To Let mortgage enables you to buy a property as an investment and let it out to tenants. The amount you can borrow is partly based on your deposit and how much rent you anticipate to receive. Lenders also take into account your personal circumstances and income. A “stress test” is often applied, making sure you can still afford the mortgage if interest rates were to rise significantly in the future.

Let To Buy Mortgage

A Let To Buy mortgage enables you to rent out your current home to tenants and buy a new home to live in. This requires two mortgages: one for your rented property and one for your new property. Let To Buy mortgages can be complicated, and the range of deals are limited. The amount you can borrow will depend on a number of factors, such as how much rent you can receive for your current home, your deposit, your income and personal circumstances.

Offset Mortgage

An Offset mortgage enables you to offset your saving against your mortgage, requiring you to pay less interest on your mortgage. For example: If you have a mortgage of £200,000 and savings of £50,000, you will only pay interest on £150,000. This can be beneficial, as interest rates on savings can be considerably lower than the interest rate on borrowings. You also don’t pay tax on interest that you do not receive.

We’re Here To Help

Our team of mortgage advisors are here to provide more clarity and to help you choose a mortgage that is most suitable for you.

Please call us on 01322 446 934 or email di@bifs.co.uk for a free consultation.