There are no less than 15 different types of mortgages, yet most first time home buyers in Surrey elsewhere do not know of many of them. While a mortgage broker can help you greatly, it is ultimately in your best interest that you educate yourself as much a possible before taking any service. For instance, it is important to know what a Debt Consolidation in Surrey is. Now, without any further ado, here are the various types:
Standard Variable Mortgage: This is the most common type that you shall come across. In this module, the monthly or periodic payment which you need to give depends on the SVR or Standard Variable Rate of the money lender.
Fixed Rate Mortgage: As the name says, the rate of mortgage here remains fixed throughout. It has a period of or a time limit of 2 to 4 years. In some cases, you may need to pay a premium on top of interest for security reasons. This system brings a lot of peace and security to the customer as he or she already knows the rate of interest will not change.
Capped Mortgage: The Capped Mortgage is very similar to Fixed Rate Mortgage. However, the only difference is that in this case, the rate of interest may fall according to circumstances.
Self Certification Mortgage: This is mostly taken by self-employed individuals rather than salaried individuals. This is because in this case there is no need to show income proof.
Repayment Mortgage: This is what most mortgages are. It means that you have to pay back both the capital repayment and the loan’s interest. The good news is by the end of the repayment period, you will have settled the mortgage debt completely.
Interest-only Mortgage: In this type, you only need to pay off the interest at first and not the capital amount at first. After the interest amount has been paid off, you will need to avail a separate investment plan in order to pay off the capital amount of mortgage.
Investment mortgage: This is very similar to the previous one in the sense that the interest is paid off first and then the capital is paid with the help of a systematic investment plan.
Endowment mortgages: It is similar to the Investment mortgage. However, it is not very popular in the UK because there have been many instances of people being unable to pay off the capital amount.
Base Rate Tracker Mortgage: This is similar to the SVR mortgage. However, the difference, in this case, is that the interest rate is fixed to a particular discount of the Base Rate of the Bank of England.
Joint mortgage: This is where several parties pool their resources to buy a property.
In this article, you have seen 10 types of mortgages. It is our hope that by the time you need to take a service, you will be able to make an educated pick.