Regardless of if you are a first time buyer in Hull looking to take your first steps towards climbing the property ladder, or are going through the process of moving home in Hull, it will become apparent during your research that there or lots of potential mortgage options.
Some of these are more frequently found that others. We have put together a helpful list of the options we deal with the most. Each section s accompanied by a helpful mortgage video from our YouTube channel, MoneymanTV.
You can find more Helpful Mortgage Guides on MoneymanTV here or visit our “Mortgages Explained” playlist directly here.
A fixed-rate mortgage will mean that your monthly mortgage payments will stay the same for a personally specified period of time, as you’ll be fixing your interest rate to a set amount.
It is entirely your decision when looking at how long you choose to fix your payments for, with common fixed-period lengths typically being between 2 to 5 years.
You are able to go higher than this, though many opt for shorter, as you don’t want to fix in for too long and then see rates drop, leaving you on a higher rate of interest when you otherwise wouldn’t want to be.
Regardless of any changes to inflation, interest rates or the economy you’ll be able to stay confident and happy, knowing that you are not only on the best deal, but your biggest outgoing, your mortgage, will stay the same.
A tracker mortgage will mean that the interest rate of your mortgage will track alongside the Bank of England’s base rate; the base rate that dictates things like inflation.
To explain this in much simpler terms, this will mean that the mortgage lender that you end up going with will not be the one to set your interest rate. Additionally, you will not be setting your own interest rate either by fixing in.
Instead, you will be paying a percentage above the Bank of England base rate. To give an example of this, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.
Often seen as the standard mortgage you will come across, taking out a repayment mortgage will see you paying back both capital and interest combined each month.
Providing that you are able to keep up your payments for the entire duration of the mortgage term, you will be guaranteed to have your mortgage balance paid off once your term ends, with your home becoming 100% yours.
It is widely believed to be the most risk-free way to pay your capital back to the mortgage lender. Early on into your mortgage term, you will mostly be paying back interest and your balance will go down quite slowly, especially if you have say a 25+ year term.
This will work the other way when it comes to the final 10 years or so of your mortgage, as it will be more capital than interest that you are paying off, making the balance go down much quicker.
Whilst you will find that the vast majority of modern buy to let mortgages are set up on an interest only basis, it is much less likely for a mortgage lender to offer this type of product to a residential customer.
With a buy to let mortgage, you will typically have some form of investment vehicle (most likely the property itself) to be able to repay the capital at the end of the mortgage, as this type of mortgage will see you only paying the interest during your term.
This is not always the case for residential purchases. It may be applicable, however, if you are downsizing at an older age or have other investments that you can use to pay the capital back.
Mortgage lenders tend to have pretty strict rules when looking at offering interest only products to customers, and the loan to values are a lot lower than they once were, meaning you’ll likely have to put down quite a substantial deposit to cover the risk.
If you are taking out an offset mortgage, your mortgage lender will set you up a savings account to run alongside your mortgage account, helping to offset the interest, in order to save you money.
This means that, let’s say you had a £100,000 mortgage balance and deposited £20,000 into your savings account. You would still have £100,000 to pay back, but you’d only be paying interest on £80,000 of that balance.
You have the flexibility to deposit and withdraw funds as you see fit, though for it to be beneficial you’ll need to be making substantial contributions into your savings. It can be very efficient for higher rate taxpayers.
Last edited 06/09/2022