When you take out a mortgage, we’ll need to think about the repayment method, interest rate and special features of some mortgages. The best mortgage for you will depend on your circumstances - so it's important for us understand your options.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There are two main ways you can pay off your mortgage. These are called 'repayment' or 'interest only'.
With a repayment mortgage you make monthly repayments for an agreed period (the term) until you've paid back the loan and the interest.
Interest only mortgage
With an interest only mortgage you make monthly repayments for an agreed period but this will only cover the interest on your loan. You'll also have to pay into another savings or investment plan that'll pay off the loan at the end of the term.
Interest rate deals
As well as deciding on your repayment method, we'll need to look at the interest rate deals on offer, for example:
Standard variable rate
With a standard variable rate (SVR) mortgage your payments go up or down according to the lender's standard interest rate. This is an interest rate that is set by individual lenders and is not directly linked to the Bank of England's base rate.
Standard variable rate with cashback
With these deals you get a cash lump sum as well as the loan when you take out the mortgage. You're usually tied into the variable rate for a set period.
You pay a lower interest rate to begin with then move to another rate (usually the lender's standard variable rate) after a set period.
Tracker rates are linked to the Bank of England rate or some other 'base rate'. This means they'll always go up or down in line with changes to the base rate.
You pay a fixed rate of interest for a set period, so you know exactly what you'll be paying each month during that time. When the fixed period ends, you'll usually move to the lender's standard variable rate. There are usually penalties if you pull out early.
Capped or cap and collar
With a capped rate you pay a variable interest rate, but there's a ceiling so your payments won't go above a certain amount for a set period. Some deals include a collar too - this is the lowest rate you'll get. If interest rates fall below the collar, you'll lose out.
We don’t usually charge a fee because we receive commission from the lender. However, you could choose to receive the commission and pay us a fee instead, which would typically be 2% of the loan. So for a £100,000 mortgage, our fee would be £2,000.