There are many mortgage types available on the UK market. While mortgage lenders have reduced the number of mortgage products available, it is no longer possible to get 125% or even 100% mortgages anymore there are many other options to consider.
The best deals at the moment are for those able to put up bigger deposits to ease lenders concerns and reduce their risk so if you can put up a 25-40% mortgage you can get a decent rate.
One of the most well known mortgage types is the fixed rate mortgage. Your mortgage is fixed at a certain rate over a certain length, usually between one and five years. Fixed rate mortgages will mean you don’t have to worry about fluctuations in the market and if you fixed your mortgage at a low rate it may be more beneficial over the long term. The negative points for fixed rate mortgages is that it may be more costly to have a fixed rate mortgage should interest rates fall and you should take into account how the market may be performing when your fixed rate deal comes to an end. Many lenders are starting to offer five year deals, there is a good chance the market will be at higher rates since the market should have recovered and returned to similar pre-credit crunch lending rates.
You also need to be aware of the small print. Many lenders will charge an early redemption fee should you wish to get out of your mortgage early, may be to take advantage of a better offer, so do check this before going ahead.
Variable rate mortgages are the other of the mortgage types offered in the UK. In the current economic climate these rates are changing frequently as the Bank of England reduces the base rate interest. Although mortgage rates can be very low you have to be aware many mortgage lenders have ‘collar’ levels. Meaning they won’t reduce their interest rate below a certain level. Although many lenders haven’t enforced this clause you should make sure you know if a lender incorporates this in their contract.
