Mortgage Payment Types
 

Standard Variable Rate

  • Rates will rise and fall in line with the market conditions.
  • Some lenders can keep the changes to one a year.
  • There may be penalties for early repayment.
  • As the payments increase when mortgage rate rises, it may be difficult to accurately budget for your mortgage payments.

Cashback

  • Pays some Cashback to you on or after completion date.
  • Appeals particularly to first time buyers, money can be used for legal fees, soft furnishings etc.
  • Check the mortgage offer for early repayment penalties, as you will normally be required to keep the mortgage on a standard variable rate with the lender for a specific period.
  • Interest rates charged may be higher.

Fixed Rate

  • Means the payments are fixed for a guaranteed period.
  • Usually there is a choice of mortgage terms available.
  • It may be possible to fix again when the period ends.
  • Budgeting is more accurate when a mortgage payment is known.
  • If interest rates rise above the fixed rate, you will benefit.
  • If interest rates fall below the fixed rate, you will loose out.
  • Usually your interest rate will revert to the lenders standard variable rate at the end of the fixed term.
  • There may be penalties for early repayment.
  • The lender usually charges an arrangement or booking fee.

Capped Rate

  • The interest rate is variable with an upper limit for a guaranteed period.
  • An early repayment fee will usually apply.
  • The lender usually charges an arrangement fee.

Discount Variable Rate

  • The mortgage rate will be guaranteed to be discounted from the lenders standard variable rate, which will rise and fall in line with the market conditions.
  • After the discounted period the rate will revert to the standard variable rate.
  • There will usually be a charge for early repayment.

Flexible Mortgages

  • Allows you to make additional or lump sum payments in excess of your scheduled monthly amount, enabling you to pay off your mortgage early.
  • If additional payments are made it will reduce your monthly interest rate charge.
  • Gives you the potential to pay off your mortgage early.
  • You can also take payment holidays, subject to certain restrictions.
  • Can allow you to vary your mortgage payment.