Capital Repayment & Interest Only Mortgage Loan, Fixed & Variable Rate Mortgage Loan UK

Mortgages - The Basics Explained

Before you choose your mortgage its important to understand the different types available. So here's our simple guide to make it easier for you to make the right choice.

There are two basic mortgage types:

Capital Repayment - you pay a portion of the loan and interest due each month. At the end of the term, the mortgage has been completely repaid.
Interest Only - you pay off interest each month. The capital is repaid separately, usually through an investment-linked policy that you pay into at the same time.

AND YOU CAN CHOOSE FROM A NUMBER OF VARIATIONS:

Variable - monthly mortgage payment go up or down in line with your lender's standard variable rate. When the rate changes so do your repayments.
Fixed - Fixed - the rate does not change for a fixed period. When that ends you pay the Lender's variable rate, often for a certain time after the fixed rate has ended.
Capped - With this type of mortgage your payments cannot exceed a pre-agreed fixed maximum monthly amount, the `Cap`. However they can go down if interest rates fall below the Cap.
Discounted - These offer a fixed percentage off the lender's standard variable rates, usually for a limited period. Your payments go up or down, but they are always less than they would be on the lender's standard variable rate mortgage.
Tracker - Your interest rate is a fixed percentage above Bank of England or LIBOR rate. Similar to a variable rate mortgage it clarifies how interest rate changes are calculated.

Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR variable. The actual rate available will depend on your circumstances. Ask for a personal illustration. APR is variable and based on a usual case. A broker fee between 0 - 3 % will be charged but only on completion.