This is one of the most popular mortgages currently, where the interest rate is fixed for a pre-determined length of time. This is usually either 2 or 5 years, but they have also been known to come in 3, 7 or even 10-year periods. It’s often the case that the longer you fix for the higher the rate will be as you will be buying more security.

After the fixed-rate, you will normally move onto a lender’s SVR (Standard Variable Rate), which will usually be higher. At this point, we would reach out to our clients to let them know their mortgage payments may be going up and intervene via enacting a remortgage to stop this and find the next best deal.

There are many advantages for fixed-rate mortgages:

• You will be able to budget easily for each mortgage payment as you know exactly how much you will be paying for the length of the fix. This allows our clients more security when it comes to living their life with no need to worry about their mortgage payments increasing
• Although sometimes more expensive than variable mortgages, you are paying for the additional security
• Sometimes, a fixed-rate mortgage comes with a cashback payment incentive of up to £500 on completion
• Sometimes, a fixed-rate mortgage can also come with a free mortgage valuation

There are also some disadvantages:

• Your payment will stay the same during the fixed period even if other interest rates decrease
• There could be early repayment charges if you want to repay the loan early

If you want to find out more, get in contact with AP Mortgage Solutions today.

Tracker rate mortgages are not fixed at certain interest rates. They move in line with one of two external rates: Bank of England base rate (BBBR) or London Inter-Bank Offered Rate (LIBOR).

Residential mortgages usually follow the BBBR. If the BBBR rate rises then so too will your mortgage rate by the same margin. If the BBBR falls, then so too does your mortgage by the same margin.

A tracker rate will be a specific amount above the BBBR, for example, if you take out a mortgage that says your rate is BBBR + 1.5%. This will mean the interest rate you pay is set at 1.5% over whatever the BBBR is. It’s important to note that when it comes to tracker rates, they will have a certain percentage that they will not fall below (this is also known as the “floor”).

Advantages of a tracker rate mortgage:

• The rate at which you pay tracks an interest rate like the BBBR. If this rate decreases so too does your tracker rate

Disadvantages of a tracker rate mortgage:

• Some lenders will put in a floor which means the tracking rate will not fall below a certain percentage even if the rate being tracked continues to fall
• Budgeting can be a little more difficult as you don’t pay a fixed rate every month
• Repaying the loan early could incur early repayment charges

If you want to find out more, get in contact with AP Mortgage Solutions today.

A Standard Variable Mortgage (SVR) is a mortgage lender’s internal interest rate. When it comes to the SVR, the lender has the option to set it where they wish and make changes with the prevailing economic conditions. After the initial mortgage deal has been made, most people will move onto an SVR or tracker rate once a clients existing deal has expired.

What are the advantages of the Standard Variable Mortgage?

• You gain more flexibility
• You can repay your mortgage earlier without incurring early repayment charges

What are the disadvantages of a Standard Variable Mortgage?

• Budgeting can be difficult if your mortgage payments are fluctuating
• Usually, they are not the lowest interest rate that the lender can offer

If you want to find out more, get in contact with AP Mortgage Solutions today.

This type of mortgage is where it is linked to a current account or savings account held often by the same lender. The amount that you owe on a monthly basis is reduced by the amount of money in these accounts before the interest is calculated on the loan. In essence, as your current or savings balance rises, you pay less interest on your mortgage and vice versa. It’s also important to note that linked accounts that are used to reduce mortgage interest payments don’t attract interest.

What are the advantages of an offset mortgage?

• Tax is applied to your savings, however if your savings are used to offset your mortgage you won’t pay income tax on these savings
• Mortgage repayments can be reduced as you increase your savings
• You can keep paying the higher level in order to pay off your mortgage early

What are the disadvantages of an offset mortgage?

• You need to have a healthy level of savings for the scheme to be beneficial
• If you want to repay the loan early, there could be an early repayment charge

These mortgages are very rare these days, however a cap and collar mortgage is similar to an SVR but with a “cap” on how high the interest rate can go and a “collar” on how low it can fall for a certain time period. There are some circumstances where you can get a mortgage with a cap but without a collar.

What are the advantages of a cap and collar mortgage?

• Budgeting your finances is made a little easier as you know the maximum amount you may pay

What are the disadvantages of a cap and collar mortgage?

• In some cases where a collar is enacted, your interest rate won’t go below a certain level
• If you were in the position to pay off the loan a little earlier there may be an additional early repayment charge