Find The Perfect Mortgage
Finding the right mortgage is essential if you are moving house. Understanding what mortgages are on offer for your circumstances will give you an idea of what property you can afford and what deposit contribution you will need. If possible always get independent financial advice when taking a mortgage, and compare the full market to get the best offer.
You must pay Stamp Duty Land Tax (SDLT) if you buy a property over the current Stamp Duty threshold of £125,000. The amount of stamp duty you pay depends on whether you or the person you’re buying with are first time buyers purchasing your first home and the purchase price is less than £500,000. If you are buying an additional residential property worth £40,000 or more will have to pay additional stamp duty even if the property you already own is abroad. You must send an Stamp Duty return to HMRC and pay the tax within 14 days.
Stamp Duty Changes - July 2020
As part of the plan to stimulate the economy, the government had announced that first time buyers and home movers in England and Northern Ireland won’t pay stamp duty on the first £500,000 of the property value, from now until 31 March 2021.
Compare mortgage deals to find the perfect home loan for you and understand what the difference is repayment and a fixed rate.
With an interest only mortgage you do not pay off any of the mortgage, you only pay the interest on it. This means your monthly payments are lower but at the end of the mortgage term you need to pay the loan balance in full. People with an interest only mortgage usually invest their mortgage in other products to pay off the balance or the property could be sold and the equity used to clear the debt.
Fixed Rate Mortgages
With a fixed interest rate mortgage, your lender will guarantee that the interest rate will remain at an agreed rate for a specific time period, for example: 5 Year Fixed Rate at 2.9%. When the fixed rate period ends, you will then be moved onto to the lender’s default rate (or standard variable rate), so at this stage you should look at remortgaging or your repayments could increase significantly.
With a repayment mortgage you will pay back the loan each month along with interest on however much capital you owe. When you reach the end of the term you will have repeated the loan in full including any interest. repayment mortgages are also known as capital and interest mortgages. These are the most popular mortgage products.
Standard Variable Rate Mortgages
Standard Variable Rate is essentially the lender’s standard interest rate. Every lender has their own Standard Variable Rate, and this can change whenever the lender chooses. When a fixed deal expires, you will find yourself on a Standard Variable Rate, so make sure you are on the ball and speak to your lender or financial advisor to remortgage.
Discounted Rate Mortgages
This is an agreed discount on the Lenders Standard Variable Rate. Your repayments could change more frequently with this product if the lenders Standard Variable Rate changes.
Tracker Mortgages are a type of variable rate product, which means you could pay a different amount to your lender each month. Tracker Mortgages follow an interest rate to determine what you pay each month (for example, the Bank of England base rate), then a fixed amount is added to this by the lender to give you your monthly payment. If the base rate changes then so does your monthly repayment. These mortgages are not for everyone and you need to be able to handle fluctuations in your monthly repayments with Tracker Mortgages.
Capped Rate Mortgages
Capped Rate Mortgages are variable mortgages, but are capped unlike the Tracker. The interest rate is higher than a tracker mortgage.
Cashback mortgages are very popular as they give you a lump some which you can use to pay some other fees. Cashback deals are usually between £500-£1500. Cashback deals don't usually come with other incentives. Remember that the cashback is added to your loan and related over the term so if you don't need Cashback then choose a product that does not offer this.
Flexible Mortgages generally have terms that let you vary the amount you pay. You can pay more or less than the monthly amount you agreed with your lender. You can also take a payment holiday if needed. The flexibility comes at a premium and you will have to pay a higher interest rate.
Offset Mortgages allow you to use your savings to reduce the interest you pay on your mortgage. Speak to your lender or financial advisor to see how you can convert to an offset mortgage and use your savings to save you money on Interest.