A Guide to Understanding Different Types of Mortgages
If you’re in the market for a new home or looking to refinance an existing mortgage, it’s important to understand the different types of mortgages that are available in the UK. With so many options to choose from, it can be overwhelming to determine which one is right for you.
In this guide, we’ll explore the most common types of mortgages available in the UK, so you can make an informed decision.
1. Fixed-Rate Mortgages: A fixed-rate mortgage is a type of mortgage where the interest rate remains fixed for a set period of time, typically between two and ten years. This means that your monthly mortgage payments will remain the same for the duration of the fixed period, regardless of any changes in the Bank of England’s base rate.
2. Tracker Mortgages: A tracker mortgage in the UK is linked to the Bank of England’s base rate and tracks its movements, resulting in changes to the interest rate and repayments throughout the initial period or the full loan term.
3. Discounted Rate Mortgages: A discounted rate mortgage is similar to a tracker mortgage, but instead of tracking the Bank of England base rate, the interest rate is set at a certain percentage below the lender’s standard variable rate for a set period of time.
4. Offset Mortgages: An offset mortgage is a type of mortgage where your savings are offset against the amount you owe on your mortgage. This means that you’ll only pay interest on the difference between your savings and your mortgage, potentially reducing the amount of interest you pay over the life of the mortgage.
5. Interest-Only Mortgages: With an interest-only mortgage, you only pay the interest on your mortgage each month, with the aim of repaying the capital at the end of the mortgage term. These mortgages are often used by buy-to-let investors and those looking to invest in property.
It’s important to note that there are other types of mortgages available in the UK, and the right mortgage for you will depend on your individual circumstances. At Acuity Professional, our expert advisors can help you assess your needs and find the right mortgage for you. Get in touch today to find out how we can help.
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Read moreThe information contained within this article is for information purposes only and does not constitute investment advice. It is not an offer to purchase or sell any particular asset and it does not contain all of the information which an investor may require in order to make an investment decision. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.
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