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What Are The Different Types of Mortgages ?

Suppose you’re making mortgages as your financial choice for the coming days. In that case, you should consult a professional mortgage advisor in Stamford to gain a detailed understanding of the different types of mortgages. A thorough understanding will help you save money and make an informed decision about the most suitable type of mortgage. According to the consultants, there are typically four types of mortgages to choose from. They are, namely, fixed-rate mortgage, variable-rate mortgage, interest-only mortgage, and specialised mortgage.

Contact advisors for comprehensive advice and consultation on the various types of mortgages.

What are the different types of mortgages?

Fixed-rate mortgages

These types of mortgages provide stability and predictability in financial planning. So when you opt for a fixed-rate mortgage, you can be sure that the monthly payments remain constant. This type of mortgage is appealing for those who want to make fixed deductions and have planned accordingly. Since the interest rate for fixed-rate mortgages remains constant, they facilitate easy financial planning. This type of mortgage is particularly useful when interest rates rise. If you’ve opted for this type of mortgage, your offering will be safeguarded against such unplanned hikes.

Variable rate mortgage

As the name suggests, variable-rate mortgages are those in which the interest rates and monthly payment rates fluctuate. The drastic shifts generally influence the changes in the rates of economic indicators. Variable-rate mortgages are broadly classified into four types: standard variable rate, tracker mortgage, discount mortgage, and capped rate mortgage.

Interest-only mortgages

This type of mortgage involves the borrowers making a monthly payment that also covers the interest. When you opt for this mortgage, the principal balance remains unchanged. Hence, you will need to make lower monthly payments. This type of mortgage is suitable for individuals who are not yet ready to assume the burden of high loan amounts. It requires them to make an interest payment only every month. This arrangement results in significantly lower monthly repayments, enhancing the financial flexibility of borrowers.

Specialised mortgage options

These are mortgages designed to meet specific financial requirements. If you’ve opted for either offset mortgages or discount mortgages, then, depending on the flexibility, the consultants will help you with the choice between offset mortgages and discount mortgage options. For borrowers opting for an offset mortgage, the savings account will be linked to the mortgage, which helps lower the interest rate applied. This type of arrangement helps to reduce the interest costs.
Again, borrowers considering discount mortgages are allowed to borrow at a reduced rate of interest, especially on the lender’s standard variable rate for an agreed period. This type of mortgage offers borrowers financial ease, especially during the early stages.

Guarantor mortgage

If, as a borrower, you lack a substantial credit history, it will become more challenging for you to obtain a mortgage. That’s when you can opt for a guarantor-backed mortgage option. This setup is feasible, as family members of the borrowers will handle the repayments if the borrower is unable to make them. The financial stability of the guarantor plays an important role in determining the amount of money that the borrower can borrow.

Contact David List Mortgage Consultants Ltd for personalised, tailored advice on different types of mortgage decisions. Contact us for more details.

A mortgage is one of the most crucial financial decisions. Are you planning to opt for a mortgage? Planning it rightly is essential. Accurate planning helps identify potential financial risks and navigate them smoothly, and only a mortgage advisor in Spalding can assist you with this. If you are wondering whether it will be the right decision, you might be influenced by common misconceptions about mortgage advisors. Clearing them is mandatory to prevent missed opportunities, costly mistakes, and to make informed decisions. 

What Are the Common Misconceptions Regarding a Mortgage Advisor in Spalding?

Myth 1: Mortgage Advisors Are Expensive 

  • Fact: Mortgage advisors charge the lenders, not the borrowers. It means you don’t need to pay the advisor and can get the work done for free. The bank or the individual you are taking money from will pay the mortgage advisor. Additionally, most of the time, the advisors receive commission only; they do not charge separately. 

Myth 2: They Recommend A Fixed Lender 

  • Fact: Independent mortgage advisors maintain a list of lenders, including specialists. As a common citizen, you can access these specialists, and they only work with the advisors. Connecting with these dedicated mortgage specialists allows you to take advantage of special offers and tailored packages, leading to flexible interest rates. 

Myth 3: Working With A Bank Makes the Process Easier 

  • Fact: Working with a bank is less time-consuming because they only share their offers. Banks do not extend the offers of other lenders. Therefore, you don’t get the chance to compare it; it’s about closing the deal faster. However, eventually, it leads you to significant losses. You might pay higher interest rates. 

Myth 4: All The Advisors Offer the Same 

  • Fact: There is a wide range of advisors, including those for adverse credit, remortgaging, and high-value loans. You need to connect with an advisor who caters to your interests. The level of experience and expertise controls the quality of advice, lender network and personal support. Hence, selecting the advisor largely controls the success rate. 

Myth 5: Hiring an Advisor Can Slow Down the Process 

  • Fact : Contrary to common belief, hiring an advisor for your mortgage fastens the process. They craft the required documents with a wealth of knowledge, which helps prevent common mistakes and receive approval faster. Additionally, as most of the advisors have a personal relationship with the lenders, they use it for communications. This reduces confusion and helps in getting replies faster than usual. 

Myth 6: Tools Can Do The Job of The Advisors 

  • Fact: Online tools can calculate the budget and interest rates. However, they are unable to offer personalised advice. These tools can’t analyse your financial condition and other obligations; only an advisor can do this. An advisor can assess your income, responsibilities, and credit history and provide advice accordingly.

Hiring a mortgage advisor in Spalding is not overspending or a luxury. It is a practical and utmost professional step to make an informed financial decision. Whether you are a seasoned real estate investor or a novice, consulting with an advisor can help you make the best investment ever. 

At David List Mortgage Consultants Ltd, we have been offering mortgage advice since 1993. Our personalised advice and plans help you to make financial decisions every time. 

Connect to book your consultation now.