Fixed Rate Mortgage: A mortgage which has a fixed interest rate over a set period of time.
Tracker Mortgage - A mortgage which is directly linked to the Bank of England Base rate. For example; if your mortgage rate is 0.50% over the Bank of England base rate and the base rate increase by 0.25%, then your mortgage will increase by 0.25%. This is a variable rate so your payments can increase and decrease.
Flexible Mortgage - This is a mortgage whereby you can offset your savings or current account account against your mortgage, you can choose to either reduce the payment or the mortgage term. (These mortgages vary enormously from lender to lender - it is always worthwhile to check.) Sometimes a mortgage which allows your to make overpayments can be referred to as a flexible mortgage.
Discounted Rate Mortgage - These are variable rate mortgages which are a set percentage above or below a lenders standard variable rate. it is important to remember that your mortgage may not change when the Bank of England change their rates. It is best to check with the individual lender on their policy.
Early Repayment Charge - this is a charge the lenders levy should you redeem (pay off) your mortgage within a set period of time (this will be stated on your mortgage offer.) Some mortgage have early repayment charges which extend beyond the initial period. We never recommend this type of mortgage with extended early repayment charges.
Interest only - when a mortgage is taken out on this basis, no capital is repaid to the lender. The mortgage will be repaid either from the sale of the property or from a repayment vehicle. It is the clients responsibility to set the repayment vehicles up.
Repayment or Capital and Interest Mortgage - The original mortgage amount and the interest are paid at the same time, mostly interest at the beginning of the term, this gradually changes throughout the term, until at the end it is mostly captial being repaid. This type of mortgage ensures that the capital will be repaid at the end of the term, assuming all monthly mortgage payments are made as required by the Lender.
Let to Buy - when you let your current residential mortgage property and buy a new residential property.
Loan to value - This is the difference between the value of your home compared to the mortgage on it. For example; if your property is valued at £100,000 and you have a mortgage of £90,000 then the loan to value would be 90%
Higher Lending Charge - A charge levied by the lender to cover them in the event of negative equity, this is normally charged on higher loan to values - can be very expensive.
Arrangement fee - A fee charged by lenders, normally varies depending on the rate you choose, this fee is mostly payable on completion and can often be added to the mortgage. Please be aware that by adding these fees to the loan, the resulting cost of those fees over the term of the mortgage will be higher.