| Mortgages
Explained |
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Buy-to-let
Mortgages
When purchasing a property to let you
need a specific buy-to-let (BTL) mortgage.
Fixed, discount, flexible, tracker and
self-certification products are available.
Lenders generally require achievable
rent to be approximately 100% and 150%
of the monthly mortgage repayments.
Normally a 15% deposit is required.
Interest rates and fees are generally
higher than residential mortgages.
Fixed rate Mortgages
With a fixed rate mortgage the monthly
repayments remain the same, regardless
of what happens to the base rate, for
the duration of the initial deal. Seldom
the cheapest mortgage on the market,
it is an attractive product that offers
stability.
Discount
Mortgages
Lenders offer an initial discount off
their standard variable rate (SVR) once
the set period of the discount is up.
In a period of low interest rates, this
can have the effect of making a large
mortgage look affordable. A 2% discount
on lenders SVR of 5.75% means you would
pay interest at a rate of 3.75% for
the period of the discount – but
only as long as the SVR stayed at 5.75%.
Your mortgage rate will stay 2% below
the SVR but if interest rates rise and
the lenders rate follows, your payments
will also increase, and your rate will
revert to the now higher SVR once the
discount period ends.
Flexible
Mortgages
Flexible mortgages enable you to take
more control over your finances due
to various features that set them apart
from more conventional mortgages. You
have the ability to make ‘over
payments’ ‘underpayments’
and take ‘payment holidays’.
In addition you can withdraw money up
to a pre-agreed borrowing limit, or
equal to the sum of overpayments made
previously.
Tracker
Mortgages
The rate of a base rate tracker follows
the changes in the Bank of England base
rate. The pay rate is typically 1% to
2% above the base rate. These products
can be fixed, capped or discounted.
However, with tracker mortgages you
are exposed to the risk of your pay
rate rising if the base rate increases.
Self-Certification
If you are self-employed or your income
fluctuates, a self-cert loan could be
the answer. You can declare your income
without having to back it up with accounts
or payslips. Interest rates are usually
0.5% to 1.5% higher than for conventional
mortgages |
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advisors are ready to help you on your mortgage
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