Mortgage Guide

Mortgages come in a wide variety of flavours to suit every need. However, such varied choice can cause confusion among first time buyers. Our guide will help you determine which is the right mortgage for you.

What is a mortgage?

A mortgage is a loan from a bank or building society that is used to pay for the purchase of a home or property. The lender is repaid the full amount (plus interest), over a period of time, in monthly instalments.

Standard Mortgage

A standard mortgage is one with a fixed interest rate and which has fixed monthly payments over the life of the loan.

Flexible Mortgage

A flexible mortgage, as the name suggests, is flexible around today’s lifestyle. Allowing you to make lump sum payments, borrow back money, take payment holidays or make underpayments. Interest is calculated daily, which means you don’t pay interest on repayments you have already made. Flexible mortgages usually have a higher interest rate than standard mortgages, but you can pay your mortgage off early which is a huge attraction for many people.

Remortgage

You can pay off your existing mortgage in full by taking out a new mortgage on a property with a new lender and using the money from that. This is known as remortgaging and is a common practice in today’s market. The reason for remortgaging is to gain preferential and competitive rates and to save money on interest paid over the complete term of the agreement.

Commercial Mortgage

A commercial mortgage is a loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest. A commercial mortgage may be affected by the credit history of the business in question, or the individual owner of the business.

Adverse Credit Mortgage

Known by many names such as “non-status mortgage”, “bad credit mortgage” or “sub prime mortgage”, it is estimated that 1 in 4 British people would not qualify for a standard mortgage from a high street lender. For this reason, there is now a big market in helping people with previous credit problems. You may pay slightly higher interest rates because you are considered more risky by the lender, but if you pay off your mortgage in full, you may find your bad credit rating is repaired.

For more information about these and other types of mortgages, visit Mortgage UK where you can also apply for a mortgage online which takes just a few minutes and a single form to complete.