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Types Of Mortgage Special Offers
Mortgage special offer rates can last from a year or two right up to 25 years and come in a variety of forms.
Until recently the various different types of mortgage would be sold in their own right, but nowadays some lenders offer mortgages which combine more than one kind of rate for the borrowers convenience.
The different types of mortgage special offers are listed below.
Fixed rate Fixed rate offers mean that your mortgage interest rate remains constant, regardless of national rates, so you are fully aware of how much you will have to pay before the offer ends.
Capped rate mortgages Capped rate mortgages mean that your maximum payment will never exceed a set amount so, in the event of national rate rises, your mortgage will not become unmanageable. Having said this, if UK rates drop then so will yours.
Discount rates Discount rates are, as the name suggests, lower than the particular lenders standard variable rate (SVR) and follow in line with national interest rates, so when they drop so do your installments, but the opposite also applies equally. Because of this discount rates are most cost-effective when national rates are about to go down or are already dropping.
Tracker mortgages Tracker mortgages are a relatively new concept, but - put simply - the SVR is in direct correlation with the UK base rate (usually a percentage point or two above it) but is set by the lender, rather than being fixed.
Low SVR mortgages Low SVR mortgages offer you similar benefits to fixed rate alternatives, in that your rate is constant, but instead of the low rate being temporary it runs for the entirety of the mortgage (at least that is the theory, long-term nothing is certain).
On top of all of the above, several lenders also offer fee-free remortgaging, which could save you anything up to one thousand pounds. Finally, remember when your special rate ends your payments may jump quite substantially, so be aware.
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