We understand just how difficult it can be when it comes to choosing the right mortgage to meet your needs, which is why it is so important to seek the right professional advice.
More and more people in Shropshire are turning to Dwello Mortgages for this specialist service because they know it can be trusted and we will always act in your best interests and not stop until you’ve got the right mortgage for you.
Mortgages explained
For many, navigating the world of mortgages is complex, difficult to understand and even harder to be sure of coming up with the right solution. Today we will attempt to clear the muddy waters by explaining a bit about the different types of mortgages to consider when buying or remortgaging here in Shropshire.
Mortgages basically fall into two categories: Fixed rate, which means the interest rate you pay will remain the same over a fixed period of time, and variable rate, which means the level of interest at which you pay your mortgage will rise and fall in line with the variable rate set by your lender or the Bank of England base rate – which is reviewed every six weeks.
Most borrowers in Shropshire opt for a fixed rate mortgage which is most commonly set up over terms of two or five years – although other time scales are available over three, seven, 10 or even 15 years. At the end of the agreed period you will need to remortgage or be subject to being moved to your lender’s Standard Variable Rate (SVR), which is usually much more expensive.
Staying on track
A Tracker Mortgage tracks any Bank of England base rate changes and mirrors the rise and fall within your variable rate mortgage plus a set percentage. A mortgage lender can set their own variable rate whereas a tracker Mortgage follows the Bank of England base rate, meaning when the Bank’s rate rises so does your monthly payments. If the rate falls, so will your monthly charge, unless your mortgage is governed by a ‘collar’, in which case your repayments will only fall to a set level.
Tracker mortgages have introductory deal periods, normally set at two years, after which you will be moved to your lender’s standard variable rate unless you remortgage.
A SVR set by your lender will usually be much higher than that which could be expected of a fixed, tracker or discount mortgage. SVRs don’t change frequently – they are not directly linked to the base rate but are likely to be affected by it.
Other things to consider:
- Interest-only or repayment mortgage? – Your mortgage will be one or the other. An interest-only mortgage means only paying the interest each month and paying the entire loan off at the end of the mortgage term. The more common repayment mortgage means paying off some of the loan along with interest payments each month.
- Discount mortgages – These are deals that charge your lender’s SVR with a fixed margin deduction, meaning if your lender’s rate is 4% and your deal is set at SVR less 2% you will pay a rate of 2%. Introductory deals for discount mortgages are usually set at two years.
- Joint mortgages – Buying a property with a partner, family member or friend will result in all parties being named on the mortgage agreement and being responsible for repayments. It should greatly increase the amount you can borrow. Lenders usually allow up to five times your annual income, so if you earn £35k per year you would be able to borrow £175k. If the person you enter into a joint mortgage with earns the same, that will mean being able to borrow up to a maximum of £350k.
- Specialist mortgages – You may be eligible for a specialist mortgage if you need help from a parent or family member in getting onto the property ladder. This may be achieved through a guarantor mortgage. Green mortgages can be available at cheaper rates for people buying new properties with high energy-efficiency ratings. Specialist lenders can also help in situations of poor credit ratings, and specialist mortgages can also be an option for the self-employed, who may find it difficult to otherwise secure a mortgage.
Taking the next step
Choosing the right type of mortgage for you may seem like a daunting task and needs to be considered in light of your own particularly unique set of circumstances. Anyone in Shropshire seeking a mortgage or looking to remortgage can contact us today at Dwello Mortgages.
Let us do the hard work for you – it will not only provide peace of mind but also ensure that you get the best deal for you.
Email Nathan@dwellomortgages.com
