Welcome to the mortgage rate guide. Interest rates vary a great
deal amongst the major lenders; you have a fixed mortgage rate, capped, variable,
flexible, minimal status, Libor based... some are fixed for a limited time, interest
only with an endowment policy or an ISA. Lots to choose from! If you go for a fixed
mortgage rate the interest is likely to be higher to protect the lender against
adverse market forces. On the one hand you know that the repayment figure will not
go up but if interest drops you won't benefit. With a capped loan you put a ceiling
on the repayments so you can take advantage of a reduction in interest but they
can't go through the roof! Unfortunately capped loans will attract a slightly higher
mortgage rate.
Click here for online mortgage rate guide comparisons
A variable interest loan allows you to take advantage of a lowering of interest
but again the cost will be slightly higher; there are penalties imposed for early
settlement of loans which can be avoided by taking a loan allowing flexible payments;
these allow overpayments which can be an advantage but it would be wise to find
out how the finance company calculates any increase as loans are not necessarily
linked to the Bank of England base mortgage rate. Minimal status covers people who
may have been made redundant, but have sufficient funds to live on, or where one
spouse has substantial income but it may be more beneficial for instance for tax
purposes that the property be in the other spouse's name. Libor means 'London Interbank
Offered' mortgage rate, instead of being linked to the Bank of England the lenders
prefer to use Libor. Interest only loans require that you have an endowment policy
to run along side the repayments which mature and pay off the loan.
The can be influenced by your credit history. If you have had any CCJs against you, or a history of late payments, the lenders who would be willing to lend you money would probably want to charge you more to cover the higher risk. There are a multitude of possible extra charges for, for instance, arrears. Lenders are required under the Code of Practice to provide a tariff showing any extra charges and additional interest for late payments.
We recommend that you consider taking out a Payment Protection Plan with your loan, to give you peace of mind for times when you may not be able to meet the monthly payment due to illness or redundancy. The policy would always be there fall back on.
Bestquote mortgage rate and Moneyquest (UK) Ltd
Head Office, 2-5 Springfield House
Bishopbriggs, Glasgow, United Kingdom, G64 1QE
Tel: 01869 277023
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