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Mortgage Process

Understanding Mortgage Types

There are various types of mortgages available in the UK market. Understanding the different options will help you choose the most suitable mortgage for your circumstances.

Repayment Methods

Repayment Mortgage

You pay back both the capital and interest each month. By the end of the term, you'll have paid off the entire mortgage.

  • Most common type of mortgage
  • Guaranteed to pay off the loan if all payments are made
  • Higher monthly payments than interest-only

Interest-Only Mortgage

You only pay the interest each month. The capital must be repaid at the end of the term.

  • Lower monthly payments
  • Need a separate repayment strategy
  • Less common for residential properties

Interest Rate Types

Fixed Rate

Interest rate stays the same for a set period (typically 2-5 years).

  • Predictable monthly payments
  • Protection against rate rises
  • Might pay more if rates fall
  • Early repayment charges may apply

Variable Rate

Interest rate can go up or down, affecting your monthly payments.

  • Standard Variable Rate (SVR)
  • Tracker rates (following Bank of England base rate)
  • Discount rates (discount off lender's SVR)

Special Mortgage Types

First-Time Buyer Mortgages

  • Help to Buy schemes
  • 95% mortgages
  • Guarantor mortgages
  • Shared ownership

Other Specialist Products

  • Buy-to-let mortgages
  • Offset mortgages
  • Self-build mortgages
  • Green mortgages

Key Considerations

  • Consider your long-term financial goals
  • Think about how long you want to fix your rate
  • Calculate the total cost over the mortgage term
  • Check for any early repayment charges
  • Seek professional mortgage advice