We are UK mortgage experts and just as importantly we are an independent mortgage broker offering independent mortgage advice.
Here we have tried to provide a brief explanation for some of the more common mortgage terms and features. If you still have questions after reading this page please give us a call on 0870 7623016 or complete our contact enquiry form online today.
Capital Repayment mortgage - This could be called either a repayment or capital and interest loan. This mortgage is designed to fully repay the initial sum over the term of the loan.
Interest Only mortgage – As the name suggests, you only pay the lender the interest due each month on your mortgage. You do not make any capital repayments and the balance of your mortgage will remain constant and does not decrease. It is your responsibility to maintain some vehicle or plan which will repay the debt at the end of the term. This could be an endowment plan, pension or ISA for example.
Standard Variable Rate (SVR) mortgage - This is the lender’s “normal” mortgage interest rate. Each lender sets their own SVR, which then may vary according to the Bank of England rate changes.
Tracker Rates - Essentially, they track the Bank of England (BoE) base rate. This differs from the SVR above which lenders are at liberty to change to suit their own requirements. The 'tracker rate' can only change when the Bank of England rate changes.
Discounted Variable Rate - This is based on the SVR (Standard Variable Rate) less a fixed discounted percentage. You pay the reduced rate for the period of the special product offer. If rates change your 'discounted' rate will also change; either up or down, but the amount of discount should remain the same.
Fixed Rates - This option will fix your interest rate for a set period of time regardless of movements in interest rates during the same period. This provides certainty in knowing the payments will not change, but can be disadvantages if interest rates subsequently reduce, leaving you at the higher rate.
Capped Rates - The rate charged is capped at a certain level for a set period of time. This means that if interest rates rise your payment will increase but only as far as the capped level. However, if rates fall below the capped rate, your payments will reduce.
Cashback - This type of deal will give you back a percentage of your loan as a cash sum.
Flexible Mortgages - These are a fairly new type of mortgage. The rules and features will vary from lender to lender. Generally lenders will allow overpayments, underpayments, payment holidays and the ability to have access to previous overpayments. Some lenders attach current and savings accounts to the loan or even credit cards and personal loans.
Re-mortgages - A re-mortgage simply involves moving or transferring a current mortgage to a new lender. This can also include raising extra capital by increasing the loan size.
Redemption Penalties / Early repayment charges - Most schemes, not all, will have some kind of redemption penalty. This fee is payable when you repay or reduce your mortgage within the penalty period.
