Guide Mortgage Rates Time Buyers
December 12, 2020
Buying your first home can be a scary process. That is why it is recommended that you get to know what mortgage rates are available and what they mean to you.
Fixed rates, discounted rates, offset rates, variable rates… The list goes on.
Each has their advantages and disadvantages, and one type of mortgage rate on Personal Loans in Jamaica will be better for you than someone else. Understanding what is available before you go and apply for your mortgage is essential.
Whether you’re buying a 1 bedroom flat for sale in Wroxham or 3 bedroom house in Bath, there will be a mortgage rate that is right for you.
With thanks to Diana Parkhouse for the image
The Types of Mortgage Rates on Offer
- Fixed Rates
This is where the interest rate remains constant throughout the period of the mortgage deal. Most fixed rate mortgage deals tend to last between one and five years.
One of the benefits of a fixed rate mortgage is that you know exactly what you will be paying throughout the mortgage deal.
However, these types of mortgage rates can work against you. If you are paying a fixed rate and the interest rates go down, you still end up paying your fixed rate. If interest rates continue to go down over your fixed rate deal, then you could have ended up paying a lot more money.
- Discount Rates
The interest rate is discounted against your mortgage providers’ standard variable rate (SVR). For example, if you apply for a 1.5 percent discount, and the mortgage providers’ variable rate is 5 percent, you pay 3.5 percent.
As discount rates are linked to an SVR, the mortgage payments that you pay are likely to change from one month to the next. Discount rates, like fixed rates, tend to last between one and five years.
- Standard Variable Rates
These are the most basic mortgage rates that are available. They are usually the mortgage provider’s default when it comes to applying for a mortgage.
As this is a variable rate, the amount you pay changes from one month to the next. One of the main advantages of the SVR is that you do not have to pay any fees to access this mortgage rate.
- Tracker Rates
Unlike the SVR above, the interest rate on a tracker mortgage is linked to the Bank of England base rate.
Instead of a discount being applied to the mortgage interest rate, you have a percentage added to it. The Bank of England base rate is nearly always lower than the mortgage providers SVR.
- Offset Mortgage
This is the most complex type of mortgage that is available. However, it may be your best choice if you already have a lot of savings elsewhere.
The mortgage works like a current account. Any more that you already have and earn is used against your mortgage debt. Your savings and income work by reducing what you owe, therefore reducing the interest on your mortgage debt.
If you are considering using any of the above, it is worthwhile going to find out any additional information that you can. Remember, there is a mortgage rate for you that will fit your circumstances.
Going from 1 to 5 years, the adaptable residency alternative offered by close to home advance permits you to reimburse according to your reimbursement capacity. When the credit is endorsed, the sum gets dispensed to your record inside 3 to 5 working days