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Your mortgage repayments are set at an agreed amount for a specified period of time.
The most common Fixed Rate periods are two or five years, although they can be as long as ten years. During this period your payments aren’t affected by changes in interest rates.
At the end of a Fixed Rate period, your mortgage would automatically switch to your lender’s Standard Variable Rate (SVR). It is set by them and can fluctuate, potentially increasing or decreasing your monthly payments.
Before you reach the end of your Fixed Rate period, our advisors will research the market and help you find the best deal available. It may mean staying with your current lender or re-mortgaging with a new lender.
The interest you pay on your mortgage each month can go up or down, usually but not always, in line with the Bank of England base rate.
Some months you pay more, and some months you pay less. It’s generally less popular than a Fixed Rate Mortgage, as it can be difficult to plan your monthly budget.
However, a Variable Rate Mortgage may be suitable option for you if you’d prefer not to be tied in for a fixed period, you want the freedom to pay off the mortgage or switch to another deal, or you’re likely to be making substantial overpayments.
THE THREE MAIN TYPES
Change in line with another interest rate, usually the Bank of England’s base rate. This doesn’t mean the Tracker Rate will be the same as the Bank of England’s base rate. It will be the base rate plus the Tracker Rate agreed by your lender.
When the base rate goes up or down, your rate changes by the same percentage. For example, if your lender has offered a Tracker Rate of +0.5% and the base rate is 4%, your rate will be 4.5%. If the base rate dropped to 3%, your rate would drop to 3.5%.
Tracker Rate deals usually last for two to five years. Some lenders will offer longer terms, or until you switch to another deal.
If you don’t have arrangements to switch to a new deal when your current mortgage ends, you’ll automatically be moved to your lender’s Standard Variable Rate (SVR). This rate is set by your lender internally – it doesn’t track the Bank of England base rate and is usually higher than their other mortgage products. The rate can fluctuate so your payments could increase or decrease.
This type of deal usually offers a discount off a lender’s Standard Variable Rate (SVR) for a fixed period. The discount itself is a fixed %, but the overall rate fluctuates as the SVR changes, potentially leading to higher or lower payments.
It’s important to understand that the lenders’ SVRs is set internally by them and can be varied by them, it is not related to the Bank of England base rate.
Therefore, it’s the underlying rate you pay, as well as the size of the discount you must take in to account if considering a Discounted Variable mortgage.
As with all of the mortgage products available, there are potential benefits and risks to weigh up. Our advisors can help you find the most suitable product for your individual needs.
This is the most common type of residential mortgage.
The monthly payments you make, for the agreed term of your mortgage will repay the loan amount and the interest you’ve incurred. As long as you keep up the monthly payments as agreed, the total amount you owe will reduce every month and your mortgage will be repaid by the end of your term.
Our advisors will chat to you about your circumstances and your future plans, then research the market, so they can recommend the most suitable term and mortgage product for you.
The monthly payments you make with an Interest Only Mortgage cover only the interest charged on the amount you’ve borrowed, you’re not repaying any of the actual mortgage amount. When you reach the end of your Interest Only Mortgage term, the balance you owe will still be the same as when you took out your mortgage and you’ll usually be expected to pay back the total mortgage debt in one lump sum.
The main benefit of having an Interest Only Mortgage is that the monthly payments are less than they would be with a Capital Repayment Mortgage. There are circumstances where this might be a suitable option for you, or it may be a short term solution.
Being accepted for an Interest Only Mortgage can be challenging. For a lender to agree to lend you the funds on this basis, they would expect you to prove that you have a realistic plan to be able to repay the debt in the future.
Our advisors will provide independent advice to help you decide if it’s the right option for you.
With an Offset Mortgage, your savings and/or current account are held with the same lender and used to reduce the amount of mortgage interest you pay. Instead of earning interest on your savings, they are offset against your mortgage balance, lowering the interest you’re charged on your mortgage loan.
There are some situations where this is a good option. But it’s important to do the sums on the interest. If you’re considering an Offset Mortgage you need to consider the benefits or your potential interest savings on your mortgage against the potential loss of interest your savings could earn if saved or invested elsewhere.
Our advisors can help you work out if this would be the best option for you.
You have an initial chat with one of our advisors.
You have a full consultation. The advisor will arrange to meet you when and where is convenient – your home, our office, or on a video call. You can invite family members or a trusted friend to join you if you like. Our advisor will give you options and advice to consider.
Your consultation is free and there’s no obligation to proceed.
If you instruct us to proceed, we’ll take it from there.
Have an initial chat with someone at PSG about you’re plans and arrange to meet with an advisor. They will meet you when and where is most convenient – at your home, in our office, or on a video call. If you’d like to have a friend or family member join you for the meeting, that’s fine too. You’ll be asked to have some documents available to help your advisor conduct their research.
At the start of the meeting, they’ll provide you with our Initial Disclosure Document (confirming the costs involved if you decide to proceed). You’ll discuss your circumstances, priorities and future plans with your advisor and have the opportunity to ask any questions or raise any concerns. At the end of your meeting your advisor will arrange a follow-up Presentation meeting. You’ll discuss your circumstances, needs and plans with your advisor, then they’ll explain the benefits and risks of Equity Release and other alternatives. If you agree Equity Release is the right option, a follow up – Presentation Meeting – will be arranged. You may be asked for some documents to help your advisor conduct their research.
Your advisor will research the whole of the market, reviewing all the lenders and products available.
Your advisor will talk you through the research and their recommendation for your mortgage and any protection that would be beneficial. They’ll provide a summary of the important details and costs involved – called a ‘Key Facts Illustration’ (KFI) or ‘Personalised Illustration’. They’ll go through it with you, giving you time to ask questions and ensuring you understand everything. If you decide you’re happy to proceed, the application process will begin
Your advisor will complete this on your behalf. You may need to appoint a solicitor. If you don’t already have one in mind, we can help with that.
Your advisor will continue to liaise with your lender, updating you on the progress of your application, until you have your Mortgage Offer.
Your solicitor will carry out the required checks and searches relevant to your circumstances (whether you’re purchasing a new property or re-mortgaging). They’ll report directly to you on these matters, but your advisor will liaise with your solicitor and lender throughout, helping to ensure you’re planned timescales for exchange and completion are met.
Your advisor will keep you updated and be on hand to answer any questions throughout the whole process.
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