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Mortgages - Product Options

FIXED RATE MORTGAGE

With a fixed rate mortgage, the interest rate is fixed for a given period, normally between two to five years. That means you know exactly what your monthly payments are during the fixed period. If you move to another rate before the end of the fix you will normally face Early Repayment Charges.

Fixed rates can be extremely competitive, particularly in a low rate environment. However, you always face the risk that rates could fall further, leaving you on an uncompetitive rate .

VARIABLE RATE MORTGAGE

A variable-rate agreement, as distinguished from a fixed-rate agreement, is an  interest rate that will fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in the payments. No limits are placed on the degree to which the interest rate or the payments can vary. Should rates increase, you are at risk of paying higher rates that can become a financial problem.

RE-MORTGAGE

Because of the huge choice of mortgages available on the market today lenders have been forced to become more competitive by offering competitive rates.

This can be a  way to raise cash and save hundreds of pounds at the same time.

DISCOUNT RATE MORTGAGE

A discount rate mortgage offers a percentage discount from the lender's normal variable rate for a set period of time.

When the standard variable rate fluctuates, the discount will remain fixed, and the rate you pay will fluctuate.

Example:

If variable rate is 5% and discount is 1%, then the pay rate will be 4%. The 1% discount will be fixed for the agreed period.

FIRST TIME BUYER MORTGAGE

As the name suggests, it is a rate directed at first time buyers. It is a way to attract first time buyers and may give them a better incentive than a normal mortgage. However, this isn’t always the case.

CAPPED RATE MORTGAGE

Capped rate mortgages uses the facilities of both variable and fixed rate deals.
Over a period of time an upper limit is set- a cap - on the maximum amount of interest you will pay over a particular period while allowing it to fall if the variable rate drops.



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