Within a mortgage product, you will discover that there are several different kinds of mortgages to choose from. By comparing mortgages, based on your individual circumstances, you can generate the best mortgage deals associated to you. Whether it’s the type of mortgage, the rates or payment options, comparing mortgages is a great to discover what it is you're after. The main types of mortgages deals are as follows:
By comparing tracker mortgages, you are finding mortgages based on the Bank of England base rate, plus the lender’s additional set percentage rate. For example, if you select a mortgage deal with a 2.5% set percentage rate from the lender and the Bank of England’s base rate was 0.3%, your payable mortgage deal would be 2.8%. However, if the base rate dropped as low as 0.15%, you would benefit from a reduced rate. Although the same applies if the base rate rises, making it more costly.
Comparing fixed rate mortgages will showcase how you can stabilise your monthly payments each month, regardless of what’s happening to the Bank of England base rate or the property market. This can give you peace of mind knowing your rate will stay the same. You can compare mortgage lenders rates and agree a set rate for a certain period of time. Typically, the fixed rate ranges from two to five years. However, it is possible to fix it for longer, should you want to, but it’s advisable to compare mortgage deals every so often, to see if you can secure a better mortgage deal.
When comparing discounted mortgages, you will be offered an upfront discount off the lender’s Standard Variable Rate (SVR). This is usually for the first few years of your mortgage deal, before it switches back to the SVR. Your lender’s SVR is subject to change, making your payments increase or decrease throughout the term of your mortgage deal. Therefore, comparing these, will help you find the best rates.
A capped rate mortgage is a variable rate, so your monthly repayments can fluctuate. However, the rate can be capped so that it will never go above a certain limit. You may choose this mortgage deal, if you are under the impression that mortgage rates will fall, so you can reap the rewards. But, at the same time, you want that added protection, so that there’s a cap in-case they increase. These are the areas in which you should be comparing when looking for a capped mortgage deal.
The idea behind an offset mortgage is to use any savings you have to reduce the amount of interest you pay overall. By inputting your total amount of savings, you can compare different mortgage deals. For instance, imagine you have a £250,000 mortgage and £45,000 in additional savings. You can offset these savings against your mortgage so that you only pay interest on £205,000 of your mortgage deal. The savings are still accessible whenever you choose, but that’s what makes rate on offset mortgages slightly higher than standard mortgages.
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