Mortgage Interest
Fixed rate Mortgage
Fixed rate mortgages have an interest rate that remains the same for a period of time - usually between 1 and 5 years. After this period of time the interest rate reverts to a variable rate. The fixed rate is usually at a discount as an incentive to take out the mortgage.
The advantage of fixed rate mortgagees is that there are no surprises for the duration of the fixed rate. The downside to this type of mortgage occurs if the Bank of England base rate or Libor rate falls, in which case you could end up paying more than you would have with a variable rate mortgage. Also if you want to leave before the agreed term, then you would have to pay an early repayment charge which is usually significant. For example you may be charged six months gross interest if you leave a five-year fixed rate agreement.
Please visit our Mortgage Tools pages to see some examples of this type of mortgage.
Variable Rate Mortgage
A variable rate mortgage is where the interest rate varies according to the Bank of England base rate or the Libor rate. A lender's variable rate is set above the base rate or the Libor rate by usually 1 or 2%.
With this type of mortgage if the interest rate is reduced, then your interest payment can go down, saving you money but if the interest rate is increased then your interest payments will increase.
Please visit our Mortgage Tools pages to see some examples of this type of mortgage.
Capped Rate Mortgage
With a Capped rate mortgage the amount of interest you pay can go down if the variable rate falls but cannot go above a predefined maximum. The advantage is that the rate can never go too high and if the rate falls then you pay less.
The disadvantage of this type of mortgage is that there are only a limited number of these deals on the market and they can be less competitive than fixed or variable rates.
Please visit our Mortgage Tools pages to see some examples of this type of mortgage.
Discounted Variable Rates
As the name suggests, to tempt new customers, lenders will offer a variable rate at a reduced initial rate or below their standard variable rate. After the agreed period, again one to five years typically, the rate reverts to the lender's standard variable rate.
The interest rate during the discount period will go up and down in line with the standard variable rate. Disadvantages of this type of mortgage are the rate can go up and there are penalties for leaving early.
Please visit our Mortgage Tools pages to see some examples of this type of mortgage.
Contact us now directly on 0845 643 1537 - or fill out our online enquiry form
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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Registered Office: 37 Christchurch Avenue, North Finchley, London, N12 0DG Principal: Dinendra Haria
Tel: 0845 643 1537, email: info@dhfinancesolutions.co.uk
DH Finance Solutions is an Appointed Representative of Network Data Ltd which is authorised and regulated by the Financial Services Authority - Network Data Ltd is entered on the FSA register under FSA reference 300391
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK
