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Mortgages

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MORTGAGE FINDER ~ DIFFERENT MORTGAGE TYPES

FIXED RATES

The main advantage of fixing your interest rate is certainty of knowing what your repayments will be for a certain amount of time. Depending upon economic conditions you may also be able to secure funding at rates which are below variable rate pricing. The downsides are the potential loss of flexibility and increased redemption penalties and or redemption terms.

VARIABLE RATES

When considering a variable rate mortgage, you should seek products from lenders who offer a visible pricing structure. For example, some lenders calculate interest rates at a margin over the Bank of England minimum lending rate (otherwise known as bank base rate). Other lenders will use the London InterBank Offered Rate (otherwise known as LIBOR) as an alternative to the Bank of England Base Rate. Many lenders prefer not to offer mortgages on these bases as they are then tied to a fixed level of profitability. However, from a borrower's perspective, a visible pricing structure is the only sure way of knowing that your lender is not going to increase your interest rate just because they have lost their appetite for a certain sector of lending. Be cautious and be sure that you know the basis of how your lender calculates their variable interest rates.

CAPPED RATES

By capping your interest rate you are effectively putting a ceiling on your interest rate but without fixing. The main advantage of a capped rate is that your interest rate can fall but not rise above a certain level for a fixed period of time. The disadvantage is that capped rates are often slightly higher than fixed rates.

BANK BASE TRACKERS

When considering a variable rate mortgage, you should seek products from lenders who offer a visible pricing structure. For example, some lenders calculate interest rates at a margin over the Bank of England minimum lending rate (otherwise known as bank base rate). Many lenders prefer not to offer mortgages on this basis as they are then tied to a fixed level of profitability. However, from a borrowers perspective, a visible pricing structure is the only sure way of knowing that your lender is not going to increase your interest rate just because they have lost their appetite for a certain sector of lending. Be cautious and be sure that you know the basis of how your lender calculates their variable interest rates, be it daily or monthly or even annually.

LIBOR TRACKERS

When considering a variable rate mortgage, you should seek products from lenders who offer a visible pricing structure. For example, some

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