An explanation of the mortgage types available

With so many options available, it can be difficult to find the mortgage rate that best suits your individual needs. Whether you are high up the property ladder or a first time buyer, a good lender will provide a flexible range of lending tailored for you.

Variable rate mortgages
This mortgage will follow the Standard Variable Rate of the lender. The rate you will be charged will alter if the lender changes their rate. Payments increase if the rate rises, but you will benefit from reduced monthly payments if the rate is decreased.

Discount Rate mortgages
Many lenders will offer mortgages with a discounted initial period. This lower rate can leave extra money to spend on your new house. This is very useful when first moving and are common for first time buyer mortgages In Northern Ireland and the UK they are a particularly popular choice. The rate and therefore payments will increase once the discount period has ended.
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Base rate tracker mortgages
A base rate tracker mortgage will track the base rate of the Bank of England. Your payments will increase if the base rate rises, however if the Bank of England reduce base rates, you will receive a reduction to your monthly payments.

Fixed rate mortgages
Fixed rate mortgages, as the name suggests, are fixed for a specific period. This means that you will pay a set monthly amount for the fixed rat period. The advantage of this type of mortgage is that you can budget more easily as you know exactly what you will be paying each month.

Offset mortgages
This type of mortgage enables you to offset the value of your outstanding mortgage against your savings. The value of your savings is deducted from the amount owing and can save thousands of pounds in interest charges as well as reducing the term.

Re-mortgaging your home allows you raise money for many purposes with low repayments. It is important however that the value of your home is considerably more than the amount of your mortgage.

Repayment mortgages
This involves repaying both interest and capital of the borrowed amount. The outstanding mortgage amount owed will drop each year as it is paid off and at the end of the mortgage term, you will own the house outright.

Interest only mortgages
By choosing the interest only option, you only pay the interest owed each month and not the capital amount borrowed. At the end of the term, the capital must be repaid in full and it is the responsibility of the borrower to ensure that they have an adequate financial vehicle to provide these funds.

Guarantor mortgages
The guarantor mortgage is aimed at the first time buyer or young professional with a lower income. It allows the loan to be guaranteed by a close relative, usually a parent. If your income is low, this may mean that you can borrow more than your income may usually allow as the guarantor will be liable to make the payments should a problem occur.

Len Holmes worked as a Mortgage Advisor for over 20 years selling mortgages In Northern Ireland and the UK. He now writes online advice articles and would recommend that any potential borrower visit this page or his others for mortgage help.

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