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Uk Mortgages Online
By Matt
A is a type of loan that is secured by the house bought using the loan. If at any point during the term of the a borrower is unable to keep up repayments on the house used as security, it can be repossessed by the lender. This only happens as a last resort and after all other avenues to resolve the situation have been exhausted. Because of the severity of this ultimate sanction e.g. losing your home, you should always get independent advice before taking out any type of mortgage.

Below is a brief description of the most popular types of UK mortgages.

Types of UK mortgages:

There are many types of UK mortgages and the majority will be either repayment, where both the interest and the capital borrowed are paid in full over the term of the loan - or interest-only, where just the interest is repaid and the borrower is still liable for the amount of capital borrowed at the end of the loan term. In some cases UK mortgages can be a combination of both types, where an agreed % of the capital borrowed is repaid but there will still be a lump sum balance outstanding at the end of the loan.

In cases where interest only mortgages are taken out, the borrower normally makes separate provision for the repayment of the capital, for example, by investing in an ISA, endowment policy or pension. The amount accumulated in the investment should at least cover the capital owed on the when it becomes due. It is important that a borrower makes arrangements to enable repayment when selecting an interest only mortgage. It would be unwise to put off making a provision until much later in the loan period, however, as tempting it might seem as a way of keeping down initial outgoings. This is because generally the longer you have an investment the better it usually performs by way of return, although that is never a guarantee.

As well as different ways of repaying your mortgage, there are also different options when it comes to selecting which interest rate to pay.

Mortgage products by interest rate type:

Standard

variable mortgages used to be the industry favourite before the market became as competitive as it is today. This is where the interest rate of the loan will vary in line with the Bank of England interest base rate. So, if the interest rate goes up, so do the repayments and vice versa. This type of UK usually has no eraly redemption penalty.

Fixed rate mortgages have the interest charged on the loan fixed for a set time period from one year up. Some lenders even offer mortgages that have the interest rate fixed over the entire length of the mortgage. But be aware that high arrangement fees are normally payable with this type of and there is generally an early redemption penalty too.

Capped rate mortgages have an interest rate that will vary in line with the Bank of England rate, but are guaranteed not to exceed a set rate - the capped rate - during a fixed period after taking out the mortgage.

Discount rate mortgages have an interest rate that is heavily discounted in the first few years of the loan, usually offering quite a significant saving on the prevailing interest rate at the beginning of the loan.

Special offers:

In addition to the different types of mortgages many lenders offer cashback deals on their deals. This is an initiative designed to help the borrower meet the considerable costs of a house purchase. With cashback deals there is normally a penalty in cases of early redemption; in most cases the borrower will need to pay back a proportion of the cash advanced.

Whatever type of you choose, ensure that you get proper financial advice and fully understand the ins and outs of the product you have selected. This article comprises a very brief description of the most popular types of available, but in not detailed and is designed only to be the starting point in your search for the right mortgage.

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