Mortgage

Independent mortgage advice is in your best interest

Mortgages can be confusing, since there seem to be so many different types of home loans available. However, with a little homework, it is possible to gain a sound working knowledge of the subject and an understanding of the terminology.

Even armed with this information it makes sense to talk to a professional mortgage adviser. With the number of mortgage choices available – well over 1,000 different deals (which are constantly changing), from over 100 lenders – We are well placed to help you select the type of mortgage that best suits you. We have access to most, if not all, of the latest mortgages (including many that aren’t available through high street lenders), and can provide invaluable assistance in highlighting potential pitfalls.

However, to help you make sense of the mortgage market we have prepared a brief description of each type of mortgage, with handy summaries.

Right at the outset it is important to understand that there are two facets to a mortgage: how the loan is repaid; and how interest is charged on the debt. Get this clear in your mind, and logically everything else should fall into place.

Straight variable

Most lenders offer a simple variable rate mortgage, but this may not be charged at a competitive interest rate.

Discounted

Many lenders offer variable rates with an initial discount for a period of months or years. As a rule of thumb, the longer the discount period, the lower the discount.

Cashback

Some lenders offer new borrowers a variable rate mortgage with a large cashback – a lump sum, which is normally a percentage of the loan, which is payable when the mortgage completes.

Fixed rate

You can get a fixed interest rate mortgage, with a set interest rate for as little as a year or as long as 25 years (most people choose to fix for between two to five years).

Many fixed rates are lower than the standard variable rate, and usually the longer the fixed term, the higher the rate.

Fixed rates are good for budgeting, since you know exactly how much you will pay each month for a set period. They also provide protection, should variable rates rise during the fixed period. However, if variable rates drop below the fixed rate you could pay over the odds.

Most fixed rates have early redemption penalties during the fixed term, and possibly after the fixed rate runs out. This is a fine, which is often equivalent to several months’ interest, that you have to pay if you cash in your home loan before the end of the fixed term. And, in some cases, early redemption charges may apply for some years after the fixed period runs out.

Capped rate

Offers the benefits of variable and fixed rates. Great for budgeting as there is a maximum interest rate (the cap) you will be charged for a period of years. But if the lender’s variable rate falls below the capped rate, so will your rate, and you benefit from lower monthly charges. Some capped rates have a collar or floor, which is the minimum rate that will be charged for a period.

Generally, an ideal mortgage although early redemption penalties may apply.

Summary

You have a wide choice of mortgage options, and it is possible to mix and match methods of paying back the loan with interest charging options.

We will help you select the mortgage that is most suitable for you. We have information on and access to most, if not all, of the mortgage deals available from high street lenders, as well as exclusive offers that you can’t get from bank or building society branches.

In addition, Holyoakes Group Ltd and its advisers will be able to highlight and explain potential pitfalls, like early redemption penalties and tied-in insurances, that can often take the gloss off mortgages that have attractive headline interest rates.

Since your mortgage is likely to be your single largest financial commitment, it pays to explore all your options. We are well-placed to guide you through all your choices and to help you select the most suitable mortgage for your needs.

This information has been approved by a person regulated by the Financial Services Authority (FSA). Not all mortgages are regulated by the FSA. YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED UPON IT. Loans are subject to status. We will advise the extent of research provided to you in writing.