As you start your search for a mortgage in Kent, there are two main questions you need to ask your mortgage broker:
What kinds of mortgages are there?
and What kind is best for ME?
The variety in mortgages can be quite bewildering and can make the situation seem really complicated. Each type of mortgage seems to have its pros and cons. So you really need to get your mortgage broker in Kent to look with you at your circumstances, and help you decide which might suit you.
• Standard variable rate (SVR). This is the most common type of mortgage. Each lender has its own SVR which will probably be around a percentage point higher than base rate. The SVR changes when the base rate changes, but not necessarily by the same amount. So if the base rate drops by 0.25% and your lender’s rate drops by 0.2%, the lender makes a profit. You need to get your mortgage broker in Kent to help you find the lenders that keep their rates lower.
• Tracker mortgage. The tracker will follow the base rate exactly. It won’t necessarily have the same rate as the base rate, but its rises and falls will be the same as the rises and falls of the base rate. Ask your mortgage broker in Kent to explain the difference exactly, and show you some tracker mortgage products if this is what you want.
• Discount rate mortgage. If you get a discounted rate mortgage, it will be helpful for a period, but the discount lasts for a relatively short time – usually two or three years. When you are looking into discount rates, you need to get the mortgage broker in Kent to help you check carefully to see what is the best deal. For instance one lender might advertise a big discount of 2%, but you find if you check carefully that it is 2% off a higher SVR, so it might not be as good a deal as a smaller discount off a lower SVR.
• Fixed rate mortgage. Currently, fixed rate mortgages are also for a short period – usually two or three years – though there is talk of bringing in fixed rate mortgages for longer periods to help first-time buyers. With these mortgages your repayments are fixed for the length of the deal. This is the mortgage with the clearest pros and cons! The big advantage is that it helps you with budgeting as you know exactly what your repayments are going to be for that period of time. The disadvantage is that if rates fall, you won’t get the benefit. And if they rise during the period of the deal, you could get a nasty shock at the end of the period. Talk to your mortgage broker in Kent about whether it is the right thing for you.
• Capped rate. This is in between the SVR and the fixed rate. The rate you pay varies with the base rate, but there is a ceiling over which it won’t go.
• Cashback mortgages. With this kind of mortgage, the amount of the loan includes a lump sum in your hand – usually around 5% of the loan. This can be very useful if you are starting out. But as your mortgage broker in Kent will remind you, be careful not to think of it as free money. Rates on these mortgages are usually higher than those on standard mortgages.
One thing you can be fairly sure of is that there is a mortgage somewhere that will suit you. Your mortgage broker in Kent will help you find the right one.
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