You will find that a large portion of high street mortgages that are on the market are portable. To put it simply, a portable mortgage is where you can move from one property to another without the need to pay a penalty fee. If you are looking to move to a new house and are currently in the middle of a fixed rate deal, a portable mortgage could be beneficial as you potentially could be able to avoid an early repayment charge.
Not all mortgages are portable and being with a specialist lender might not provide you with the option to port your mortgage to another property. To determine whether or not this is a possible option for you, get in contact with your lender and ask them.
Some people may not proceed with the option of porting their mortgage even if they have had the option to. The reasoning behind why customers might not want to port can be down to a number of factors. Sometimes, customers don’t port because lenders aren’t lending additional funds that a person needs to move or that the additional funds will be at a different rate to the one you have on your existing deal. Overlooking the repayment charge and swapping to a different lender altogether might be something you decide to do if it fits well with the new deal you are offered.
This is an account that will be created onto your mortgage when you decide to port it and the additional funds will end up being on a deal that is different from the original one. This means there will be two different rates of interest that are applied even though you have one mortgage and one direct debit.
One factor that may become a nuisance for you in the future with your sub accounts is that different products could overlap. This means you may need to get them aligned back at some point which will involve one of the sub accounts having to go onto the lenders’ variable rate for a period of time.
Get in touch with a buy to let and moving home mortgage advisor in Nottingham like ourselves if you are looking for an expert opinion. With our experience of dealing with thousands of applicants in this situation, we may have a good idea of how to help customers with their mortgage needs.
At the start of your mortgage journey, you will come to realise there are a range of different types of mortgages. From first time buyers in Nottingham to people moving house in Nottingham, this allows you find the best option that fits within your needs when living in Nottingham. In this article, we will be talking about the type of mortgages that many people go for when looking into options on their mortgage journey.
If you are looking into mortgages and wanting any more information regarding these types, our knowledgeable mortgage advisors in Nottingham are on hand 7 days a week, so please feel free to get in touch.
Feel free to use the points below and jump to a different mortgages type;
A fixed rate mortgage is when your interest rates are on a fixed agreement that is between you and the lender. This fixed payment can span over the course of a few years with many usually being over 2 to 5 years long or longer for many home buyers and owners.
Many people choose this option as their mortgage payment will stay the same throughout this period, even through any economic changes such as interest and inflation, so you can be rest assured that you will have no changes with your payment.
Different to a fixed rate mortgage, a tracker mortgage doesn’t have a set rate that is between you and your lender. Instead, the interest rate will change depending on the Bank of England’s base rate, so interest rates can fluctuate at any time.
For example, when repaying your mortgage, if the Bank of England base rate is 1%, and you are tracking a 1% above base rate, this means the overall rate you will pay back is 2%.
A repayment mortgage is seen as the most common of mortgage options. This involves you paying a combination of capital and interest each month. The property will eventually become yours as long as you have kept your payments going for the mortgage term and can pay off your mortgage balance at the end of the payment period.
This method is recognised as being the most risk free way to pay back your capital to the mortgage lender. On the start of your mortgage journey, it is interest that becomes your main payment. If you have taken out a much larger term like 25, 30 years then your balance will reduce to a slower rate.
Later on in your mortgage term, your payment methods will change to paying off more capital than interest and your balance will lower at a quicker rate.
Seen as one of the cheaper options in terms of monthly payments, an interest only mortgage is a payment method that involves you only paying the interest per month. Whilst that sounds ideal this means that the borrowed amount has to be paid back in its entirety by the end of the term.
Many buy to let mortgages are seen to be on an interest only basis, however, trying to get a residential property on an interest only basis is near unheard of these days, due to the complicated criteria that needs to be met.
There are circumstances where this may still apply, with reasons including; downsizing your property when you’re older or paying back capital through other investments.
Lenders can be very strict when offering these products and the loan to values are a lot lower they were in previous years.
A popular mortgage option in Australia, an offset mortgage is a blend of a conventional mortgage account with a savings account that runs alongside it. This mortgage type can allow you to be flexible by paying regularly in your offset account or withdrawing funds if needed.
This is seen as the more appealing type of mortgage as it allows you to have a savings account opened alongside your main account. An example of this is if someone took out a £100,000 mortgage but in your savings you have £25,000. You can put this into your new savings account and pay the interest on the remaining amount which would be £75,000.
There is the potential option to pay off your mortgage earlier if you keep your payments up as normal.
Similar to fixed rate mortgages, a capped rate mortgage involves the customer making repayments each month with a maximum interest rate. However, this type has a percentage that is capped which means you won’t be paying any higher than the agreed percentage, For example if you’re capped at 5%, your rate will never go above 5%.
This type can be beneficial if interest rates reduce, as your mortgage rate will follow this reduction. This should reflect in lower monthly mortgage payments.
This type of mortgage allows you to be flexible with your payments with having the choice to either underpay or overpay any amount. You can only underpay if you have overpaid the first time and have come to an agreement to do this with your lender.
With the potential to pay off your mortgage early, overpayments can be helpful if you want to pay your mortgage off early and pay less with interest.