Other Mortgage Types - Loan, Remortgage, Secured Loan, Secured

Offset Mortgages

By taking this type of mortgage, you can make the money in your current or savings account work a little harder for you than usual. The balance of the mortgage is basically reduced by the amount of money in your savings or current account. So, if your mortgage is £100,000 and you have £5,000 in savings, you mortgage balance will be considered as £95,000 and you will only be charged interest on that amount. As the interest on savings is being offset, you are effectively paying no tax on your savings interest. These mortgages are also known as Current Account Mortgages.

TIP: By offsetting your mortgage balance against a current or savings account, you could end up paying less interest or paying your mortgage balance off much quicker.

Buy To Let

More and more people are recognising the benefits of buying houses, renting them out and watching the profits roll in. In fact, investment in houses is so rife now that most lenders have set up special Buy To Let mortgages. The idea is that the income you get from the rent will cover the mortgage payments and then some. But becoming a landlord means taking on a great deal of responsibility and is also a massive financial commitment. Problems with tenants may mean that your rental income dries up. Lenders will often only lend to 75% or 80% of the property value and you will need to show that likely income rental will cover 130% of your mortgage payments. Tax on your profits will also be at the highest rate of income. There are loads of different types of Buy To Let mortgages, from fixed to discount to trackers.

TIP: Whatever you do, make sure you look around for the best deals.

Flexibility

Mortgages are traditionally a little rigid, but more and more are breaking the mould. These days, some come with flexible features, such as overpayments, underpayments, payment holidays or daily interest. Some mortgages are even designed specifically as flexible mortgages and will include most of these features. All of these do pretty much what they say they do. Overpayments and underpayments allow you to repay more money or less money throughout the year, while payment holidays allow you to take a break from repayment. Daily or monthly interest is becoming more common on mortgage products. Your monthly repayments will be making a greater dent on your interest if it is being calculated on a daily basis, so this is the way to go.

Another flexible feature, which is a mortgage type in its own right, is a Cashback Mortgage, which offers customers a lump sum cashback amount or a percentage upon completion. This frees up cash to spend on your home, but it should not be an overwhelming factor in why you choose a mortgage.

TIP: Remember to always consider the interest rate first and foremost.

Useful Financial Links

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