A mortgage is a large commitment so you can understand why it is important to get one that reflects your individual requirements. It may seem hard to believe but there are only actually two main types of mortgage; repayment mortgages and interest only mortgages. It depends how you wish to repay as to which type you choose. However there are an extensive number of deals available for each type, which is where the difficulty in choosing the correct mortgage comes. In the market there are deals such as fixed, capped and cash back mortgages which can all be tailored to your needs even further!
Fixed Rate Mortgages
Fixed rate mortgages are suitable for individuals who have a tight budget and need to know exactly what their monthly repayments will be. A fixed rate simply means that the interest rate remains the same throughout a given period stated by the lender. Even if base rates fluctuate your monthly repayment will stay exactly the same.
Capped Rate Mortgages
A capped mortgage is a variable rate mortgage where a ‘cap’ is agreed by the lender over a period of time. Throughout this period your mortgage is guaranteed not to rise above the stated ‘cap’. When interest rates are likely to vary a capped rate would offer some security. A capped rate mortgage offers a compromise between variable and fixed rate products.
Cash Back Mortgages
Some lenders will offer cash back deals on a number of products. With a cash back mortgage a percentage of what you pay for your house is offered back to you by the lender, and can be as much as 6% of your mortgage amount. The money is provided in a lump sum and can be used for any purpose.