Types of Mortgages
If you are looking to buy a property in the UK, raise some capital from your existing arrangements, optimise your tax position from rental income, or are simply looking to restructure your existing monthly payments to make savings, then Fidelius is now able to provide both UK residents and expatriates completely independent advice on all aspects of UK mortgages.
Flexible Mortgage/Offset Mortgages
The flexible mortgage is a relatively new type of mortgage available particularly in the UK. It was conceived and has been used in Australia for many years and was originally called the ‘Australian’ mortgage. However, due to its features it is becoming more popular for borrowers in the UK and around the world.
A flexible mortgage is very popular with Higher and Additional Rate Taxpayers, Fixed contract Workers and self employed workers. The reason is that a flexible mortgage has the facility for both over and underpayments built into the loan. What this means is you can overpay your mortgage when finances allow (pay rise, bonus, an inheritance etc.), and then, providing you have made overpayments in the past, underpay when finances are tight (job loss, change in circumstance etc).
Some flexible mortgages have an offset feature to them allowing the borrower to offset their savings against the mortgage balance therefore reducing the mortgage repayments. A savings and/or current account are linked to the mortgage account which means that your savings and mortgage are in one place, working in tandem together.
Variable Rate Mortgages
A fixed rate mortgage allows the borrower to budget on a monthly basis for a fixed period of time. You can fix your interest rate from as short a term as 2 years to a longer term of 25 years. This means that as variable interest rates rise, your mortgage rate will stay the same for the period you have fixed it for.
Tracker Rate Mortgages
A type of variable rate, this is an interest rate that tracks the Bank of England Base rate. If the Bank of England rate reduces, your mortgage payment will do so as well.
Capped Rate Mortgages
Capped rate mortgage options help you to budget. Interest rates on a capped rate mortgage can move up and down with the market but will never exceed a specified top level - ‘the cap.’
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