When you start searching for a suitable mortgage, it can seem like there are thousands of options to choose from. Whether you want first time buyer mortgages or want to release equity in your current home, the following information provides a simple guide to the different types of property loans you can apply for. It’s important to remember however that everyone’s individual circumstances are different and we recommend asking for professional advice from a recommended or experienced mortgage broker before you make any decisions.
Fixed Vs Variable mortgage
Any mortgage you take out will have an interest rate associated with it. This is the money the bank charges you to take out the loan and it is added to the lifetime of the mortgage, rather than being a one-off charge. However, that rate can vary depending on the mortgage. You can either have a fixed rate – one that won’t change for a defined period such as two, three or five years, depending what you agree to – or you can have a variable rate. A variable rate fluctuates throughout the course of your mortgage term. These mortgage rates are usually influenced by the Bank of England base rate. There is no right or wrong type of interest rate for your mortgage. There is more certainty with a fixed rate because you know what you will pay until the term ends. However, we recommend that you ask for professional advice or options from a qualified mortgage broker before you select either a fixed or variable rate mortgage.
Interest only Vs repayment
You can choose to pay off the interest only on your loan or repayment interest plus the capital (the amount you borrow). Some lenders will also allow you to split the term of your mortgage between interest only and repayment.
Residential Vs Buy to Let mortgage
If you’re buying a property you want to live in, you will need a residential mortgage. However, if you want to rent your property to other people as a landlord you are required to take out a buy to let mortgage. The process of applying is the same for either of these, but often with a buy to let mortgage your lender will investigate the potential rental income of the property to assess the risk as well as your own personal finances, income and expenses.
Commercial and business mortgage
At Private Wealth Mortgages, we work with associate mortgage brokers who can help you secure a commercial or business mortgage. This type of property loan enables you to borrow funds for commercial or work premises, such as office space or factory units.
For more information on any of the above mortgages, or to find out which is the most appropriate for you and your family, contact Private Wealth Mortgages. Our mortgage advisors are experienced helping people including first time buyers to find the best property loan.