When getting a mortgage to fund the purchase of your new house, you can usually pick from a variety of different options. This allows you to choose the deal that best fits your pockets and needs.\r\rHere are some of the types of mortgages you can go for:
Fixed-rate mortgage – fixed-rate mortgages have an interest rate that remains the same for a set period. Generally, This term could be anything between two to five years, but you can also find fixed-term options of up to ten years or more. The advantage of fixed-rate mortgages is that you’ll know how much you need to pay each month (as your repayments are fixed). What’s more, you won’t have to worry about any rise in interest rates.\rVariable-rate mortgage – with variable-rate mortgages, your monthly costs could alter throughout your loan term. This is because the interest rate changes in line with the Bank of England’s base rate. For standard variable-rate (SVR) mortgages, each lender has an SVR that they can move whenever they wish. SVRs can be anything from two to five percentage points above the base rate (or higher) and they can vary hugely between lenders.\rDiscounted variable rate mortgage – Rather than being linked to the Bank of England’s base rate, discount mortgages are linked to the lender's standard variable rate (SVR). For example, if the SVR is 4.50% with a discount of 1%, the payable mortgage rate is 3.50%. If the SVR rose to 5.50%, the pay rate would rise to 4.50%. Bear in mind that SVR changes are always at the lender’s discretion, meaning that your repayments could vary even if there has been no change to the Bank of England’s base rate.