The Mortgage Pot

Standard variable Rate Mortgage – This type of mortgage that is linked to the Bank of England base rates. Although the rate of interest in this type of mortgage rises and falls in step with the Bank of England base rate, lenders are not required to reduce standard variable rate, the base rates, although There was a decrease in the Bank of England. This type of mortgage is not very popular now as better rates are available in products such as Fixed, Tracker and discount. Without But it is interesting to note that when is fixed, tracker and special discount ended, normal rate variability relapse. So it is for the borrower to arrange a better deal, since the standard variable rate Mortgages are generally very high (usually 1% to 1.5% above the base rate of the Bank of England), it implying an increase in the monthly repayments.

Fixed Rate Mortgages – Lenders offer rates for new borrowers and for borrowers looking to re-mortgage. The advantage of this type of mortgage is that rates are set for the offer period eg 2 years, 3 years, 5 years etc. The borrower knows what he is responsible pay for this period and so can budget accordingly. He / she is protected against any increase in interest rates. The disadvantage is that if rates interest are falling, then he / she will not be able to take advantage of lower interest, because he / she has opted for the interest rate charges fixed. If the borrower wishes to change from a fixed rate for A Mortgage loan product with a lower rate, he / she is a clause in his contract mortgage to be subject to a prepayment charge. The reason for this charge prepayment clause is to discourage the borrower to switch to another product with the same lender or another lender. Early redemption fee will also apply if the borrower party wants – to repay The Mortgage before the specified date. However, there are lenders that allow borrowers to repay their part, say, 10% of its outstanding capital each year without paying early repayment. Note also that once the deal closes in the fixed-rate mortgage loan interest rates always returns to normal variable interest rate the lender is often higher than fixed-rate operation. Unless the borrower is taking steps to get a better deal from another lender, he or she will end up with monthly payments higher, especially if interest rates rose in the prevalence of fixed face.

Tracker Mortgage Rates – Shares of variable rate mortgages Bank of England base rate for a specified period property 2, 3 years (or more) of up to ten years. The interest rate will be a fixed percentage The Bank of England base rate for the entire period or a fixed discount of the Bank of England base rate for a period of time followed by a fixed percentage above the rate of Bank of England base for the rest. The main advantage of this product is that there is no guarantee that the interest rate will be lower after a fall in the Bank of England base rates. That assurance does not exist with standard variable mortgages. If the lender decides to reduce interest rates on variable rate mortgages, although there was a reduction in the Bank of England Base Rate, the lender is not obliged to reduce the interest on the tracker mortgage. But as with fixed-rate mortgage, prepaid Partial reimbursement expenses properly applied.

Best Rate Mortgage – This type of mortgage that offers a discount on the mortgage lender standard variable rate for a certain time or 2 years or more. Depending on the offer, the borrower pays even less than the standard variable rate by the lender such as 1%. So the borrower will benefit if the general trend is to reduce interest rates. Unlike the Tracker mortgage, the lender is not required to reduce interest rates, even if the Bank of England base rate is reduced. As with other types of mortgages, repayment / partial repayment charges will apply in this type of mortgage also.

Syed Abedin is a mortgage broker and personal credit expert. His e-mail address is syzab@btinternet.com

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