Ready to find your new home? Let's get you sorted with the right mortgage. With insight from our partner broker, Alexander Hall, we’ve spelled out the four main mortgage options to make your decision easier:
Tracker Rate
This option follows the Bank of England base rate directly, with your lender adding a specific margin. Your rate will precisely mirror any base rate movements – crystal clear and transparent. For example, if your deal is "base rate +0.2%", you'd pay 4.2%. Perfect for those who want their mortgage to reflect the wider economy (note: it normally takes a month to update). Some trackers also come with no early repayment charges, making this a great option for those who need that added flexibility.
Fixed Rate
Looking for certainty? Fixed rates lock in your interest rate for a set period, typically 2, 3 or 5 years. Whatever happens to the base rate or your lender's SVR, your monthly payments remain rock solid. It's brilliantly simple budgeting – you'll know exactly what you're paying each month, making financial planning a breeze.
Standard Variable Rate (SVR)
Every bank and building society has an SVR rate which you typically roll onto at the end of an initial deal period. Lenders typically set their SVR higher than their fixed or tracker products, but you would have no early repayment charges when on an SVR rate, giving you the option to move to another product when you're ready.
Discounted Variable Rate
This is the SVR's more attractive option: you'll get a set discount off the lender's standard variable rate. If their SVR sits at 7.25%, you might secure a 2% discount, bringing your rate down to 5.25%. Your payments will move when the lenders SVR rate moves, but you will stay a set margin below that rate. These products are often offered by building societies, some with the added flexibility of no early repayment charges.
Ready to take the next step?
Finding the right mortgage is easier than you think. Our partners at Alexander Hall can help you understand your borrowing power and secure the best deals on the market.
Source: This article has been reviewed and edited by Foxtons Sales department and Alexander Hall mortgage advisers. The information has all been carefully reviewed to ensure you have the most reliable insight for your property goals. If you have any questions about the article, ask a Foxtons expert.
