Mortgage Advice - 118Mortgage.co.uk

118Mortgage.co.uk - the best resource for buy to let, variable and capped mortages on the web
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Mortgages

Welcome to 118 mortgage, your essential resource for everything mortgage related on the web. Our aim is to provide you with the best information available to give you the knowledge you need in order to be in the best possible position when looking to secure a mortgage for that special purchase.

Home ownership is a dream for most people, but getting your foot on the property ladder can be a very daunting first step – after all a house will be the biggest single purchase you are likely to make, and the financing of such a purchase is a critical factor. When you consider that the average mortgage term is 25 years you can appreciate that finding the best mortgage for your current, and future, situation is very important, as the potential to save or loose money is high.

Shopping around is an obvious way to ensure that you get a good deal, and you should speak to at least three providers before making a decision. But before you rush to speak to the lenders, you need to be aware of the products on offer and the benefits and drawbacks of each, there is a wide range of mortgage plans available and finding the correct one for you will require time and effort – this work in the early stages will pay off for you in the long run.

When dealing with mortgages, there are four main types that you need to consider – variable/fixed rate, capped rate, flexible and bad credit mortgages.

Variable rate mortgage

With a variable rate mortgage, the amount of interest you pay on the outstanding sum will be tied to the base interest rate set by the Bank of England. When this interest rate drops people with this type of mortgage will benefit from lower repayments, however a rise in the base rate will have the opposite effect and so cost borrowers more. A fixed rate mortgage is far more stable, with the rate fixed at the beginning of the mortgage and staying the same throughout the repayment term. The fluctuations in the base rate will not affect mortgage costs at all, stopping you from suffering higher costs due to rate rises but by the same token you will not save money should the base rate fall.

Capped rate mortgage

Capped rate mortgages aim to offer the best of both worlds, combining the savings of a variable rate mortgage with the security of the fixed rate mortgage. With this type of mortgage the interest rate is tied to the base rate of the Bank of England, but there is a set upper limit to which the interest charged can go to. In this way borrowers will save on repayments when the base rate drops, and will be guaranteed that the rate will not exceed the upper amount, allowing them to plan effectively and save money when the conditions allow. This may be the best choice for many borrowers, but the upper rates offered will not be a favourable as those for other types of mortgage.

Flexible mortgage

A flexible mortgage has a fixed rate, but allows you a greater degree of freedom by letting you alter the repayment amounts to suit your current financial situation. If you find yourself in a better state of affairs you can opt to overpay each month and so lessen your debt, shorten the mortgage term and save on interest charges. Similarly if you fall on hard times you will be able to reduce the monthly repayments to give you breathing room until you can sort out any problems. These are just the key features and there are others offered with this type of mortgage, but you will be paying a premium for this freedom.

Bad credit mortgage

Bad credit mortgages are aim specifically at those people with a poor credit rating, and will generally require a larger deposit to be made, and will also charge higher rates of interest. For those with a bad credit history this type of mortgage may be the only one available to them, however keeping up with repayments on this type of mortgage can repair your credit rating in as little as three years, allowing you to switch to a regular mortgage with more favourable terms.

We at 118 mortgage hope that you have found this information useful, and that you now have a clearer idea of what mortgages are available to you. Take a look at our resources page to put you on the track to finding the best possible mortgage.

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