Mortgage Products

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Mortgages Explained

There are many different types of personal loan deals, borrowers' products and mortgages which make the UK lending market a very competitive and fluid environment. This means there is a lot of fast changing information to understand in order to make a good decision.

Here are the main types of mortgages available:- flexible, standard variable rate, tracker, fixed, capped, discount and cash back. There is also buy to let, 125%, shared ownership and right to buy.

Flexible - A potential way to reduce the total amount you pay the lender. With many features which may include daily interest, over payment, under payment, payment holidays, no early repayment charge and a bank account.

Standard variable rate - A borrower may be automatically placed on this if they do not ask their lender for a better deal. It is generally at a higher uncompetitive rate. Since UK lending has become more sophisticated over the last few years, fewer people have been placed on to this product.

Tracker - Common in combination with a flexible mortgage. This is where the interest rate charged will be the bank base rate plus a set amount charged on top, so the rate is always floating in synch with the UK Bank of England interest rate. It may be possible to get a life time tracker, which will last the full term of the mortgage.

Fixed - This is a preset rate that will not change until the end of the deal time. This will give stability but the rate is normally higher to accommodate a rate raise and there will normally be a early repayment charge and fees to tie the borrower into the product.

Capped - Where the rate has a top fixed rate but the rate can drop if the rates go down again the rate is normally higher to accommodate a rate raise and there will normally be a early repayment charge to tie the borrower into the product.

Discount - The rate will be for a preset time reduced from the bank rate or standard variable rate but this will normally also have a early repayment charge and fees.

Cashback - Normally for first time buyers. On mortgage completion the borrower will receive a cash lump sum as a percentage of the advance. However there will be fees and a long early repayment charge to tie the borrower into the product.

Mortgage Fraud - Fraud of a home loan potentially may be in the form of false ID, income details and past credit history. The government has in recent years tried to clamp down on these problem.