The world of mortgages is vast and varied, offering a multitude of products to suit different financial needs and preferences. In this blog post, we’ll look into the mortgage products available in the market, providing insights into the unique features and considerations associated with each.
Fixed Rate Mortgages
Fixed rate mortgages offer borrowers the advantage of consistent interest rates throughout a predetermined period, typically ranging from two to five years or even longer. This stability provides certainty in monthly repayments, making it easier for you to budget and plan for the future without being impacted by fluctuations in interest rates.
Variable and Discounted Variable Rate Mortgages
Unlike fixed rate mortgages, variable rate mortgages are tied to prevailing market interest rates and set by the lender. This means that as market rates fluctuate, so will the interest rate on the mortgage. While this type of mortgage can lead to variations in monthly payments, it also presents the opportunity for potential savings if interest rates decrease. Discounted variable rate mortgages offer an initial lower interest rate for a set period of time.
Tracker mortgages are linked to the Bank of England’s base rate. As this benchmark rate changes, so does the interest rate on the mortgage. Tracker mortgages offer a degree of flexibility, allowing borrowers to benefit from favourable market conditions while being exposed to potential increases in interest rates.
Capped Rate Mortgage
A capped rate mortgage is a type of mortgage with an interest rate that has an upper limit, or “cap,” on how high it can go during a specified period. This cap provides borrowers with a degree of protection against significant increases in interest rates.