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1. What are the types of
mortgages?

2. A mortgage is a type of loan in which
you take to buy your home, properties
or land. It is most definitely going to
be the biggest debt you will take in
your life time. There are different
types of mortgages and you should
identify what they are when choosing
which mortgage type is best for you.

3. There are two main
types of mortgages,
they are the fixed rate
and the variable rate.

4. FIXED RATE

5. This is a mortgage where the amount of interest that you
are charged stays at the same amount for a number of
years, no matter what happens to interest rates.
The benefits of having a fixed rate is that you do not
have to worry about your payments rising and you can
budget yourself to have the same amount of money each
month.
However, a disadvantages is that if the interest rate was
to fall, you would not benefit from it. Also, the mortgage
deals for fixed rates are not as good as variable rate
mortgages in most cases.

6. VARIABLE RATE

7. The interest you pay in this mortgage
can change at any given time. If you
were to take out a variable rate
mortgage, it is a good idea that you
have some money to the side so that
you know you can use if the interest
rate rises significantly. Variable rate
mortgages come in different forms…

8. The standard variable rate:
This is the most common rate that your
lender charges home buyers and it will
last until the mortgage is over or until you
leave. With this you have a lot of freedom
as you can leave at anytime however
your rate can be changed at anytime
during the loan.

9. Discount mortgage:
This is a discount front he standard
variable rate but only applies for a certain
amount of time. This is good as the first
payments will be lower, easing you into
the system, however if the base rate
rises, so will the discounted rate.

10. Tracker mortgage:
These move in line with another interest
rate. It is typically the Bank of England’s
rate plus a few percent. They do not last
very long most commonly, however some
pay last the whole life of your mortgage.

11. Capped rate mortgage:
This rate often moves in line with the
standard variable rate but the cap means it
will not rise about a certain level. This is good
as you will be able to budget for the maximum
it could be however these are generally
higher than other variable and fixed rates and
the cap tends to be set to a high number.

12. Offset mortgages:
This is worked out by linking your
savings and current account to your
mortgage so you only pay interest on
the difference. You are still repaying
your mortgage monthly but the saving
acts an over payment which helps to
clear the mortgage early.

13. •
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