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Are you thinking of buying a new home or re-mortgaging? Are you bamboozled by the number and type of mortgages that are available and can’t figure out where to start? You’re not alone! Mortgage lenders change their products regularly and often try to differentiate themselves by using different names for them. Ultimately, though, there are a couple of basics around mortgages. Once you’ve understood them it’s easy and we’re here to help – read on for a beginner’s guide to mortgages. Using an independent financial adviser, such as our Plutus Wealth team, can also help you find the best deal for you. Find us on www.plutuswealth.com.
One thing to keep in mind when looking at mortgages is that there are effectively two main types:
There are also two ways to pay off a mortgage:
If you need to have a set budget every month and know exactly what you are paying, then fixed-rate mortgages are a good option. There is a downside though. They will typically have a higher interest rate than variable-rate mortgages. This means that if interest rates fall your payments will not, they will remain the same.
If you choose a fixed-rate mortgage look out for any charges that may apply if you want to switch before the end of the deal. Start looking for a new deal a few months before it runs out so that you don’t get switched over to the higher standard variable rate.
Here there is a lot more choice available, with each mortgage lender honing their products to be as competitive as possible. They work on the basis that each lender has a standard variable rate (SVR). They can set this as they choose and change it as they like. It is set against the Bank of England base rate – which is currently 0.75% – and then built on to create their mortgage product. Typically, with variable-rate mortgages you can overpay when you want to and can leave at any time.
The most popular types of variable-rate mortgage include:
Still confused? Why not let our Plutus Wealth team help? As independent financial advisers it’s our job to find the best mortgage for you and your circumstances. And we’re not tied into any lender, so can trawl the market for all available products in order to find it. Call us on 020 7871 5200 or email us at firstname.lastname@example.org and let us help you take the next step.