Different Mortgage Types
We have all seen the TV adverts for a famous high street bank where the guy reels of hundreds of different mortgage products, triple decker tracker and so on.There are several types available; they are all different ways of funding your house purchase or remortgage.
Below is a list of common mortgage types, though not conclusive it will at least give you an idea.
Standard Variable Rate
The SVR is the standard rate of interest charged by the lender. The rate can go up and down. This is the rate your mortgage will go to when your initial discounted, fixed, tracker, capped or cashback rate has run its course. This rate is set by the mortgage lender.
Discount
A certain percentage below the lenders SVR. For example a 2% discount from an SVR of 6.5% gives a rate payable of 4.5% for an agreed period. Some discounts are 'stepped' over a period of time e.g. a 2% discount in year 1 and a 1% discount in year 2. Early repayment charges may apply.
Fixed Rate
A fixed monthly interest rate. It will not change for the duration, for example 2 or 5 years. Will move to the lenders SVR at the end of the period. Early repayment charges may apply.
Tracker Mortgage/Remortgage
Linked to a specific rate, normally the Bank of England base rate but can be linked to LIBOR as well for a specific amount of time. E.g. Bank of England base rate is 5% tracker is -0.65 rate payable is 4.35 variable.
And these are just some of the types of mortgage available !!
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