Mortgages in more detail

Open Vision Finance specialise in the house buying and mortgage process, so we will be there to support you every step of the way.

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We will be there to support you every step of the way, making either that first step onto the property ladder or simply moving homes, much simpler, providing a total moving experience.

Repayment Mortgages

A repayment mortgage, commonly known as an interest and capital mortgage, is a mortgage which consists of paying back the monthly interest amount alongside a small amount of capital which will mean that in the future the small capital payments will pay of the total amount borrowed before the end term.

The main benefits of having a repayment mortgage is that every monthly payment made means that the total capital is being reduced, this therefore means that by the time the term of the mortgage ends you will have paid everything back and will now have no more payments to be made.

Interest Only Mortgages

Interest only mortgages offer you smaller payments than the previously mentioned repayment mortgage, these payments are smaller as you will only need to pay the monthly interest amount from the total amount borrowed back, this therefore means that you will not be paying any of the capital amount off unless you make payments and investments when you wish to do so.

The main benefits of using this mortgage are that payments to the total amount can be made when you want and by however much you want.

Fixed Rate Mortgage

A fixed rate mortgage is a mortgage which guarantees the monthly payments for a set amount of time, meaning then that nothing will change the monthly amounts unless the term of the mortgage runs out. Once the mortgage term comes to an end then the payments will be transferred from your lender onto their standard variable rate unless specified differently.

The main benefit in which this mortgage can offer is that it gives you peace of mind that you will be paying “this” amount and no more however much the rates change etc. by then having this information it allows for you to budget and plan ahead more easily as the rates will not affect the payments you have to make.

Variable Rate Mortgage

The variable rate mortgage is a type of mortgage which the lender sets the rate to be paid back; this rate in which the lender will set will be influenced by the bank of England’s base rates which can always be changing. With this type of mortgage you as the borrower will have no say in the rate which the lender can higher or lower at any time.

The main benefit of using this type of mortgage is that the average standard variable rates range from 2% to 5% typically very low although the risk in which this offers is that the lender can easily change the rate higher or lower when they want to.

Capped Mortgage

The Capped Mortgage is a type of mortgage which prevents (caps) the maximum amount of interest you will pay however much the mortgage rate can raise. This therefore means that if the mortgage rate rises above the agreed capped rate then you will not pay that but will just pay the capped amount, whereas if the mortgage rate was to reduce lower than the capped amount you will pay this lower rate.

The benefit of using the Capped Mortgage is that you know the maximum amount of how much interest you will be paying each month and if the rate drops to less than this you will have less to pay and more money for yourself to enjoy.

Tracker Rate Mortgage

The Tracker Rate Mortgage is a type of a variable rate mortgage, this mortgage tracks the Bank of England’s base rate at a certain margin, for example 1% above or 1% below, these mortgage types can last for as long as the loan is set for, once this tracker rate ends the lender will transfer you onto their standard variable rate.

The benefit of using a Tracker Rate Mortgage is that you could secure yourself a very low interest rate, and could then save money for you in the future to budget with.

Discount Mortgage

The Discount Mortgage is a mortgage in which is agreed upon by you and the lender for a discounted rate compared to their standard variable rate, this can for a set amount of time and will remain the same for the whole amount of time, an example of this could be that the lenders standard variable rate could be 5% whereas they offer you a 1% rate discount which will then mean you only pay 4% of the amount.

A benefit of using this Mortgage type is that it will give you peace of mind that your rate will be below what the lenders are offering as their standard variable rate. The downside to this can be that if the lender increases their rate, yours will increase too, but to the agreed discount rate less.

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