New Homes For Sale I Mortgages
Types of mortgage:
RepaymentYou pay back some of the initial capital that you borrowed as well as the interest that is outstanding on the loan. If you take out a repayment mortgage over a certain term at the end of the mortgage term you will own your property outright with no extra costs incurred,. Interest OnlyYou only pay back the interest on the amount that you have borrowed, you do not pay back the capital that you have borrowed. At the end of your mortgage term you will still owe the initial amount that you borrowed to purchase the property. An interest only mortgage should be taken out alongside another form of savings plan in order to pay off the lump sum at the end of the term. FixedYou will pay a fixed interest rate determined when you initially take out the mortgage. This fixed rate will protect you from rises in the interest rates during your current deal. The most common fixed terms are 2 years or 5 years. You will be able to budget for exactly what your monthly outgoing will be. VariableThe interest rate the you pay will reflect the variable rate of the mortgage lender, this is likely to change over the course of your mortgage, this may change from one month to the next so you will not know exactly what your payments will be you may benefit when interest rates go down but should be careful as they may also increase. |
TrackerThe interest rate that you will pay be variable and will directly reflect the bank of England base rate. You will pay a premium percentage on top of what the base rate stands at. This will vary of the term of your mortgage.
New Build MortgagesSome new home developers may have special deals that they are able to offer you if you take out your mortgage with specific lenders. You will need to contact the developer directly and there will be terms and conditions that will apply to these offers. |
Notes
1. The above figures assume an annual reset type mortgage which recalculates mortgage payments once a year. As such they may slightly overstate the monthly payments for more flexible mortgages, offering monthly or even daily recalculation of payments.
2. Since April 2000 mortgage loans have not attracted mortgage interest tax relief (MIRAS).
3. A repayment mortgage is one where mortgage payments cover both interest costs and repayment of the original loan, so that the mortgage amount decreases over time. An interest only mortgage is one where mortgage payments only cover interest costs. With interest only loans, the mortgage amount does not automatically decrease over time. Frequently, borrowers will set up an ISA, endowment or some other investment product (at additional cost), designed to repay the loan at the end of its term
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