What kind of mortgage is right for you?

Which mortgage is right for you?

There are so many mortgages on offer, there's bound to be one that meets your needs. At Choices @ Peter Alan we will explain all your options, make sure we're aware of all your wishes, and narrow down the choice to the most suitable mortgage for you.

These are some of the mortgages available...

Fixed Rate - Your payments are set at a certain level for an agreed period. At the end of that period, your mortgage lender will usually switch you to a standard variable rate. Your payments will stay the same if interest rates go up. This gives you security of knowing that you can afford your payments and will make it easier for you to budget. If rates go down you won't benefit. Your payments will stay at the higher rate. There is usually an early repayment charge during the special deal period. An early repayment charge can also apply after the special deal period too.

Standard Variable Rate - Your payments move up and down with the lenders own mortgage rate, which is usually driven by the Bank of England base rate. Your payments will move as the interest rates move. It will almost certainly be expensive compared to other deals. Mortgage lenders may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down. There is not usually an early repayment charge but you should check and see.

Tracker Rate - A variable rate loan with an interest rate that's at a set amount above or below the Bank of England or some other base rate, set independently from the lender. It tracks (moves up or down with) that rate. It can pay to go for a tracker if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. It's no good if your budget won't stretch to higher monthly payments. There may be an early repayment charge during the special deal period and maybe even after the period too.

Discounted Interest Rate - Your monthly payments can go up and down, but you get a discount on the lenders standard variable rate for a set period of time. At the end of the deal, you ususally change over to the standard variable rate. The discount period is limited, so don't get used to those low repayments. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down. There is usually an early repayment charge during the special deal period. An early repayment charge can also apply after the special period too.

Capped Rate - Your payments are variable and often linked to the base rate, but fixed not to go above a set level (the "cap") during the period of the deal. At the end of the period you are usually charged the lenders standard variable rate. You know the maximum you will pay for a set period of time which is useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall. There is usually an early repayment charge payable during the special period. An early repayment charge can also apply after the special period too.

Collared Rate - May be used in conjunction with a capped rate or a tracker (or both). Your payments are variable but will not fall below a set level (the "collar"). It may be part of another interest rate deal which otherwise appears attractive. Remember - if the rate payable is only just above the "collar" and you think rates will fall, you may not get the full benefit of a reduced payment. There may be an early repayment charge especially when used in conjunction with a capped or tracker rate deal. You should check and see.

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