Mortgages

A mortgage is a type of loan designed specifically to purchase property, the capital is typically borrowed from a bank or building society. The money is paid back to the credit over a set period of time, usually 25 years, along with any interest it has accrued.

When searching for a mortgage it is important that you know what you are looking for, and understand the information because finding a mortgage to suit your requirements is essentials. There are two main types of mortgage, a repayment mortgage and an interest only mortgage.

The different between these two types is essentially that with a repayment mortgage you are required to repay the capital and interest, whereas an interest only mortgage means that your monthly repayments are only used to pay off the interest. If you opt for the latter it is important that you open some sort of ‘repayment vehicle’ such as a pension or ISA to help you pay the capital when the time comes. Each type of mortgage has its advantages and disadvantages, with one type bound to suit your personal circumstances more than the other.

Rite Financial has plenty of experience in the mortgage industry, and can help you find the right mortgage for you. Within the two categories of repayment and interest only mortgages there are four different types of mortgage rate options:

• Fixed rate mortgage: the interest rate is fixed for a set period of time and is not influenced by changes to the interest rate in the market.
• Capped rate mortgage: the interest rate is capped at a maximum level, payments will be based on the lower variable rate and will never rise above the cap.
• Discounted rate mortgage: the standard variable rate is discounted for a set period of time, but it is important to remember that monthly payments will vary.
• Variable rate mortgage: monthly payments will increase and decrease depending on the interest rate and market conditions.

There are other features and benefits to mortgages that you can discuss with Rite Financial, as you might find that some of these are useful, whereas other may not apply to you:

• Flexible mortgages: if you have a little extra money for a few months you can pay more towards your mortgage, and in some cases even reduce or miss payments entirely. The whole idea behind this type of mortgage is that it will fit around your lifestyle.
• Offsetting: in this situation a mortgage is linked to a bank account held with the same lenders, and using the balance of the savings account to offset interest. For example, if you have a mortgage of £50,000, and a balance of £5,000, you will only be charged interest on £45,000.
• Cashback: some lenders offer a cash lump sum to borrowers once they have taken out the mortgage. The amount offered varies between providers, and is often linked to a discount rather than pure cashback.

Information about mortgages is often bombarded with a whole load of jargon, making it incredibly difficult for people to understand exactly what they are being offered. Any decisions about mortgages should be taken seriously as there is usually a lot of money at stake. For further information about mortgages, or for a chat about finding one suitable for you, contact Rite Financial today.