Mixed Buy To Let Mortgages
Mortgages come with many costs. The interest rate is always the first expense that you think of, but there are others. There may be legal fees and other costs related to pricing your property, and, if you are switching mortgages, there may be early redemption penalties if you are changing mortgages before a set period of time agreed with your lender.
When comparing mortgages, the interest rate is important, as you must consider this in conjunction with other costs that any particular mortgage product might incur. For this reason, it is important to know exactly what kind of mortgage rate you are paying, in order to work out whether saving on your mortgage rate balances out any other costs.
There are many offers designed by lenders to make you believe that you will be saving money on your mortgage rate. Sometimes, these rates can provide you with a great saving, but you have to keep on top of how much you are paying year by year. Many products have mortgage rates linked to the base rate, or have rates that change after a certain amount of time, so it is important to keep up to date on this. If that sounds daunting, remember that you are a consumer, and have the choice, if your mortgage is no longer financially viable, to change mortgage lenders.
Popular mortgage options to consider
The standard mortgage that most people take out is the fixed rate mortgage. This does exactly what you would expect it to; the interest rate is fixed at a specified amount for a particular period of time, say, three years. Knowing that your mortgage rate will not increase for a set amount of time can give you peace of mind. Once the fixed rate period is over, your mortgage will revert to your lender’s standard variable rate (SVR), and if this is too expensive for you, it is a good idea to shop around for a better deal.
Tracker mortgages work in a different way to fixed rate mortgages. You could save money with a tracker mortgage, but there is a greater element of risk involved. This is because with a tracker deal, the mortgage rate is linked to the base rate, and can go up and down as the base rate does. Thus, you need to keep track of the base rate if you are interested in or already have a tracker mortgage, to make sure that you are not paying more than you need to. Discounted rate mortgages have a similar risk attached to them. The mortgage rate is set at a discount when compared to the lender’s SVR, but can increase with the base rate, so again, caution is advise with this kind of mortgage product.
Finally, the capped mortgage deal has a guaranteed maximum mortgage rate. With these products, you have the reassurance that your mortgage will never cost above a certain amount, although these types of mortgage can be expensive in other ways.
