Mortgages

Step 2 of The Money Plan is ‘get financially well organised’, this means paying the least interest on any debt you have. A mortgage is likely to be the largest debt you have and is the only debt I feel is acceptable, so it makes sense for you to have the best deal.

I have highlighted three of the better deals available for the following types of mortgage you may be considering;

First Time Buyer Mortgage | Fixed Rate Mortgages | Variable Rate MortgageLifetime Mortgage

 

First Time Buyer Mortgages

Buying your first home is an exciting prospect, but figuring out how to get onto the property ladder can feel overwhelming. Whether it’s a Help-to-Buy ISA, Help-to-Buy equity loan or a shared ownership mortgage, there’s plenty of choice out there to help you on your way.

Banks and building societies package specific deals for first-time buyers, which may include incentives such as cashback, low fees or a contribution towards legal costs.

Rate APRC Mortgage Type Period Max LTV ERC
2.55% reverting to 5.24% 4.9% Discounted Variable 2 years 95% None
Virgin Money 3.09% reverting to 4.99% 4.6% Fixed 01/03/2021 95% To 01/03/2021
2.79% reverting to 4.99% 4.6% Discounted Variable 3 years 95% 1st 3 yrs

Key: APRC= Annual Percentage Rate of Charge, LTV= Loan to Value ratio, ERC= Early Repayment Charge

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Fixed Rate Mortgages

With a fixed-rate mortgage, your interest rate is guaranteed to stay the same for a set number of years. This can offer you peace of mind, as you’ll know exactly how much you’ll need to repay during this period.

Fixed rates differ from variable-rate mortgages where your monthly repayments can go up or down because of changes in the interest rate.

2 Years Fixed Rate

Rate APRC Mortgage Type Period Max LTV ERC
1.43% reverting to 4.25% 4.2% Fixed 31/12/2020 65% To 31/12/2020
1.66% reverting to 4.99% 4.3% Fixed 31/12/2020 75% To 31/12/2020
first direct 1.65% reverting to 4.19% 3.7% Fixed 2 years 75% 1st 2 yrs

Key: APRC= Annual Percentage Rate of Charge, LTV= Loan to Value ratio, ERC= Early Repayment Charge

3 Year Fixed Rate

Rate APRC Mortgage Type Period Max LTV ERC
HSBC 1.75% reverting to 4.19% 3.7% Fixed 31/01/2022 75% To 31/01/2022
Virgin Money 1.84% reverting to 4.99% 4.2% Fixed 01/03/2022 70% To 01/03/2022
1.89% reverting to 4.99% 4.1% Fixed 31/12/2021 85% To 31/12/2021

Key: APRC= Annual Percentage Rate of Charge, LTV= Loan to Value ratio, ERC= Early Repayment Charge

Fixed Rate 5 Year & Over

Rate APRC Mortgage Type Period Max LTV ERC
Yorkshire Building Society 1.96% reverting to 4.99% 3.8% Fixed 30/11/2023 75% To 31/12/2023
Metro Bank 2.04% reverting to 4.25% 3.5% Fixed 30/11/2023 80% 1st 5 yrs
M&S Bank 2.04% reverting to 4.19% 3.5% Fixed 30/11/2023 85% To 31/01/2024

Key: APRC= Annual Percentage Rate of Charge, LTV= Loan to Value ratio, ERC= Early Repayment Charge

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Variable Rate Mortgages

A variable rate mortgage is the opposite of a fixed rate mortgage. The interest rate – and, consequently, your monthly mortgage repayment – can fluctuate at any point throughout the term of the mortgage. There are two main types of variable interest rate: the standard variable rate or a tracker rate.

The standard variable rate is set by your lender, who can increase or decrease it at any point. Most lenders tweak their standard variable rate to reflect changes in the Bank of England’s base rate. However, they may change it even though the Bank of England’s base rate is unchanged.

A tracker rate follows the movements of another interest rate, usually the Bank of England’s base rate. So, if the base rate goes down, the tracker rate goes down too and vice versa. However, the tracker rate is usually higher than the rate being tracked. By way of example, a tracker rate could be the Bank of England’s base rate plus 2%.

Rate APRC Tracker Period Max LTV ERC
2.05% for Term 2.2% No Term 65% None
2.15% for Term 2.2% No Term 75% None
2.25% for term 2.4% No Term 85% None

Key: APRC= Annual Percentage Rate of Charge, LTV= Loan to Value ratio, ERC= Early Repayment Charge

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Lifetime Mortgage (Reverse Mortgage)

With a lifetime mortgage, you take out a loan secured on your home which does not need to be repaid until you die or go into long-term care. It frees up some of the wealth you have tied up in your home and you can still continue to live there.

When you die or move into long-term care, the home is sold and the money from the sale is used to pay off the loan.

Anything left goes to your beneficiaries. If your estate can pay off the mortgage without having to sell the property they can usually do so.

Most lifetime mortgages are protected by a negative equity guarantee if they are a member of the Equity Release Council (previously SHIP), which means if your mortgage exceeds the value of your property when it’s sold, the mortgage company covers the negative equity or shortfall. For more information visit their website at https://www.equityreleasecouncil.com/.

APR Fixed/Variable Min age Min property value Min loan Max loan Product Fee
4.2% Fixed 55 £100k £10k £4m No Fee
4.3% Fixed 60 £70k £10k £1m £595
4.4% Fixed 60 £100k £20k £500k £595

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