CLEAR CHOICE MORTGAGES

Types Of Mortgage

There are many different type of mortgage products available on the market today. These are the main ones, but lenders can offer combinations of the following products. To ensure that you opt for the right one, pleased call us first as we can only make a recommendation after we have assessed your needs fully.

• Fixed Rate
• Discount
• Tracker
• Capped
• Cashback
• Offset/CAM

Fixed Rate

This a product where the rate is fixed for a period of time, from say 12 months to 10 years.  You are usually tied into the product for the duration of the fixed rate and if you want to change your mortgage to another products there will be an early repayment charge to pay.

A fixed rate remortgage or new mortgage gives you peace of mind on outgoings. With a fixed mortgage you know that whatever happens to interest rates, your monthly payments will stay the same for the agreed period.

Discount

A discount mortgage gives you a lower rate for an agreed period. A discount mortgage usually give you a discount from the lenders Standard Variable Rate. There is usually a tie-in for the duration of the discount.

Tracker

The difference between a tracker rate mortgage and a discount rate mortgage is that a tracker mortgage is linked to the Bank of England interest rate so your mortgage will be guaranteed to move in line with the Bank of England interest rate.

With a discount rate mortgage you are linked to a lender's Standard Variable Rate, which they can move as they see fit.  On this basis, we generally recommend tracker rates above discount rates.  The best tracker mortgage for you will depend on your specific requirements.

Capped

A capped rate mortgage option helps you to budget. Interest rates on a capped rate mortgage can move up and down with the market, but will never exceed a specified top level – ‘the cap.’ Capped rates are a niche product, and sometimes they are not available.

Cashback

Some produtcs have a cashback offer attached to them combined with a fixed or tracker rate.

Products offering higher amounts of cashback tend not to offer any discount off the interest rate and you may be locked in for a period of time.

Offset/Current Account Mortgages

An offset mortgage or current account mortgage uses the balance in your everyday savings or cheque account to reduce what you owe on your mortgage on a daily basis.

This can amount to substantial savings in interest over the term of the loan or can be used to repay your loan quicker.

These options can sometimes be taken with fixed or variable rate product.