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Mortgages - Know Your Rates


Once you are clear about the type of mortgage you want - repayment or interest only, choosing how you want to be charged interest is next. The options are:

Variable rate

This is the one that moves up and down, mirroring the base interest rates set by the Bank of England. Lenders aren’t tied to these rates, so can vary them.  Your lender will set their variable interest rate higher than the base rate, usually 1% or 2% above it. If the base rate is 4.5% and your mortgage lenders’ variable rate is 1.5% above it, you will pay 6% interest. Be watchful, as variable interest rates vary widely between lenders and they are not as competitive as other mortgage deals on the market.

Fixed rate

This rate gives greater certainty, as your interest payments are guaranteed not to change for the duration of the fixed term, typically between one and five years. Occasionally you can find longer terms. At the end of your fixed rate term, the interest rate will usually revert to the lenders standard variable rate. 

If interest rates fall below your fixed rate during the duration of the loan, you end up paying more than if you’d chosen the lenders variable rate. You may have to pay a reservation fee for the fixed rate, called an Arrangement Fee. If you change your mortgage during the fixed rate period, and sometimes for a period after it ends, you will usually have to pay the lender an early repayment charge.

Capped rate

These interest payments have a fixed maximum – a cap – that you will pay for a fixed term. If interest rates rise, yours will not exceed above this ceiling rate. You get a certain degree of protection if rates rise significantly, and if they fall, you pay less. The interest rate set for capped deals is often slightly higher than fixed rates.

This security can make it easier to budget for your monthly mortgage payment. At the end of your capped rate term, the interest rate will revert to the lenders standard variable rate.  If you change your mortgage during the capped rate period, and sometimes for a period after it ends, you will usually have to pay the lender an early repayment charge.

Discounted rate

You will receive a guaranteed discount on the lenders standard variable rate for a fixed term. So, if the lenders standard variable rate is 5.5%, with a guaranteed discount of 1%, you will pay 4.5% interest for a set period. Remember though that only the amount of the discount is fixed. The rate will still be variable so the amount you pay can still go up.

You may have to pay an Arrangement Fee to reserve the lenders’ deal. If you change your mortgage during the discounted rate period, and sometimes for a period after it ends, you will usually have to pay the lender an early repayment charge.

Tracker rate

Lenders will set their tracker rate at a certain margin above or below the Bank of England base rate, and move in line with it. If the base rate drops significantly, you will benefit financially, paying less in interest. But equally, you will feel the pain of rate rises. You can find tracker rates for a set number of years or for the life of a loan.

Cash back

These aren’t rates, but an incentive used by mortgage lenders to entice borrowers to specific mortgage products. On completion of your mortgage loan, the lender will give you an agreed sum, which could be as little as £100, up to £7,500, which you can use for any purpose.  Lenders aren’t in the habit of giving customers something for nothing. Rest assured, they will claw the cash back over your mortgage lifetime. If you switch in the early years this could be through an early repayment charge. 

What to watch for

Any lender offering any special offer rates will do it for a reason. They are hoping that when the term ends, you’ll stay with them out of loyalty, or simply forget to move mortgages.

Watch out for deals that lock you into a mortgage contract for a set time, applying an early repayment charge if you want to switch mortgages. Some will apply a charge even after the introductory rate has ended. Look for deals with no extended early repayment charge.

Also, make sure you factor any administration charges or reservation fees into your cost calculations, especially when remortgaging. These may offset any savings benefits you think you may get from a fixed term deal.

Mortgage interest rates change regularly, and so do the offers. For the fuller picture and to get a true idea of what your mortgage will cost in the long-term, get some advice from a qualified mortgage specialist. We can help make buying your property a more agreeable experience.

We typically charge £395 for arranging a residential mortgage payable on completion (if the fee is higher than this we will confirm it to you at the outset), we will also recieve commission from the lender.

For a Buy to Let Mortgage we typically charge 0.5% of the mortgage amount, the exact amount will be confirmed to you at the outset

For commercial mortgages we typically charge bewteen 0.5% and 1%, the exact amount will be confirmed to you at the outset

The information contained below does not constitute advice or a recommendation and the user should seek advice if in any doubt prior to making an application


 
Mortgage Brokers In Harrow
 
Contact Annis Financial
Contact Annis Financial
Do you require expert mortgage advice?
Call us today on 020 8861 0719 
Email. annisfinancial@aol.com
We are always happy to help and assist you... 

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YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

For residential mortgages we typically charge a fee of £395, the fee will be agreed with you before we commence any work

For Buy to Let mortgages we typically charge a fee of £495. For commercial mortgages we typically charge a fee of 0.5% to 1% of the mortgage and this will be confirmed to you at the outset, for example on a mortgage of £100,000 a 0.5% fee equates to £500 and a 1% fee equates to £1,000

The Financial Conduct Authority does not regulate conveyancing and some aspects of buy to let mortgages.

Annis Financial Management Ltd is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register No. 300242 at *www.fsa.gov.uk/register/home.do
Annis Financial Management Ltd is a credit broker and not a lender

Annis Financial Management Ltd registered in England & Wales No. 5018735. registered address 116 Elm Drive, Harrow, HA2 7BZ The Guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.

Where you have a complaint or dispute with us and we are unable to resolve it to your satisfaction then you may have access to the Financial Ombudsman Service. Please see the following  link for further details *http://financial-ombudsman.org.uk

*You are leaving the web site of Mortgage Advisers in Harrow and about to view the content of an external website, Annis Financial Management cannot be held responsible for the content of external web sites.


Call us today on 020 8861 0719
Email. annisfinancial@aol.com

Annis Financial Management Ltd
116 Elm Drive Harrow, London HA2 7BZ
Phone: 020 8861 0719
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