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Types of Mortgages Available

Mortgage Features and Interest-Rate deals.

As well as choosing between a repayment and an interest-only mortgage, you can also choose different features and interest rate deals to go with it.

 

With an Offset Mortgage, your bank current account, savings accounts, or both are linked to your mortgage.† Your accounts are usually, but not always, held with the mortgage lender.† Each month, the mortgage lender reduces the amount you owe on your mortgage by the amount in these accounts.† It then works out the interest due on the balance of the mortgage.† So, as your current account and savings balances go up, you pay less interest on your mortgage.† As they go down, you pay more interest.

An Offset Mortgage can be tax efficient if you pay tax on your savings.† This is because you donít earn any interest on your savings and so donít pay any tax on them.† Instead you pay less interest on your mortgage.

The interest you save on your mortgage is usually more than the interest you would have earned after tax on your savings.† This benefit is greater if you are a higher rate taxpayer.

This type of mortgage offers a number of flexible features.† You can change your mortgage payments to suit your ability to pay.

Several flexible features are becoming more common, and they are not confined to loans that have flexible in their name.† Consider which of the features are important to you.

You can pay more than the normal monthly mortgage payment; pay a lump sum off the loan, or both.

Truly Flexible mortgages wonít penalise you for making overpayments.† The what happens if you want to make overpayment? Section of the KFI tells you whether or not there are any restrictions.

Overpayments give you the following benefits:

  • If you pay off a lump sum, you benefit straight away from paying less interest each month (because the amount you owe is less).
  • If you continue paying at the higher level, you will pay off you loan quicker.† Sometimes you can reduce your mortgage term if you overpay regularly.

To get the benefit of overpayments straight away, choose a mortgage on which interest is calculated daily or monthly.

You could save money in the long run.† This is because your mortgage will cost you less in total.† And if you switch to another mortgage deal in the future, you may be able to get a better deal on a smaller mortgage.

Your lender may offer this with any of the interest-rate deals.† The lender pays you a sum (for example 3-5% of the amount you borrow) shortly after you complete on your mortgage.

If you move to another lender in the early years, you must repay some or all the cashback you received.

 

Contacts

Simply Mortgages
62 High Street
Bangor
Gwynedd
LL57 1NR

Tel: 01248 371088

Email:
gwyn@simplymortgages-uk.com
sally@simplymortgages-uk.com

Legal disclaimer

Simply Mortgages is authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage. Some Buy To Lets are not regulated by the Financial Conduct Authority.