Want to know more about what is available? Let us help you make sense of all the jargon.
- "Making sense of mortgage deals"
- "Making sense of repaying your mortgage"
- "Making sense of the home-buying process"
- "Making sense of valuations and surveys"
"Making sense of mortgage deals"
We will not charge you an upfront fee and will take you right through to the completion of your mortgage.
BE AWARE! The lowest initial rate doesn't always represent the best deal. You should consider the fees that are charged and also how the deal works over the whole time you will be with that lender.
Understanding the types of deal (or mortgage schemes, as they are also known) will help you make an informed decision. We have given you a description of the main choices below but remember that our experience with people in all types of circumstances means we can advise you which scheme is right for you. Why not give us a call or click on the Call Me Back button to speak to an adviser. We will not charge you a fee and will take you right through to the completion of your mortgage.
Variable
Typically with this scheme you will pay the lenders standard variable rate, which can change at any time. This type of scheme makes it difficult to budget as any changes in interest rate will affect your monthly payment.
Discount
For a specified period of time, usually one to three years, the lender offers a discount off their standard variable rate. Your mortgage rate can, therefore, go up or down, but will have the discount applied throughout the scheme period. This offers a true saving against the lenders standard variable rate for the period of the scheme, but as with the Variable rate mortgage, it can be difficult to budget as your payments can change. You will usually be required to stay with the lender during the scheme period, or pay an early repayment charge if you wish to come out of the deal early. Some discount mortgages have early repayment charges that apply after the discount has ended.
Tracker
Your interest rate is directly linked to that of the Bank of England. The lender offers a percentage above or below the Bank of England's Base Rate for a specified period of time. After this you will usually revert to the lenders standard variable rate. These schemes offer a more accurate reflection of the economy but can make budgeting difficult.
You will usually be required to stay with the lender during the scheme period, or pay an Early Repayment Charge if you wish to come out of the deal early.
Fixed
You are given a fixed interest rate for a set period of time. At the end of the term the lenders standard variable rate is paid. These products usually carry an arrangement or booking fee which is payable when you take out the mortgage,
With a fixed rate there are usually early repayment charges during the scheme period, which in some cases may even extend beyond the fixed rate term.
A fixed rate may be chosen if you expect interest rate to rise generally, or if you wish to be able to plan your budgeting.
Capped
Your interest rate varies in line with general interest rates, but does not rise above the interest rate cap, or fall below a certain rate. This is called an interest rate collar. This agreement lasts for a fixed period of time, after which the normal variable rate is paid. As with fixed rate mortgages, this scheme usually carries arrangement fees and early repayment charges.
Flexible
Flexible mortgages give you the ability to adjust your mortgage repayments to suit your changing circumstances.
Overpayments
Regular overpayments can quickly pay off your mortgage without any early repayment charges. Your outstanding mortgage balance is regularly recalculated, adjusting your interest payments.
Underpayments
Financial difficulties may mean that you are unable to make the regular payment and so with a flexible mortgage there is an option of reducing your payment, however this increases the outstanding mortgage balance.
Further Loans
An extra lump sum can be withdrawn from your mortgage account, without the formality of applying for a new loan. There are obviously conditions associated to this affecting the amount you are able to borrow. (Not all of these factors are available with all flexible mortgages and features that are on offer are usually dependent upon the lender.)
Offset Mortgages
A newer type of mortgage scheme that allows you to use your savings to reduce the interest you pay on your mortgage. The lender calculates the interest you owe based on the mortgage balance minus the amount you have in your offset savings account. As the rate of interest on a mortgage is often much higher than that received in separate savings accounts, you are effectively getting a better return on your savings. In addition, interest saved is not taxable, whereas interest earned is normally taxed as income. For example: someone with a mortgage balance of £150,000 and a savings of £20,000 could incorporate the two into an offset mortgage and only pay interest on £130,000. However, as the interest rate charged on the mortgage is usually higher some of the other schemes, care must be taken to ensure this does not negate the benefits of offset. Typically the rates on these schemes will vary in line with market conditions, making them more difficult to budget with.
Current Account Mortgages
Combines an offset mortgage with your current account, so interest if offset from what would normally be a credit balance in your main account. These mortgages often have the flexibility to overpay and underpay, and redraw money up to the pre-approved limit, effectively making your mortgage a large, long term overdraft. As with standard offset mortgages the interest rate charged is usually variable, and often higher than some of the simpler schemes on the market. Therefore, they are only really suitable for those comfortable with a more sophisticated financial arrangement.
"Make sense of repaying your mortgage"
Repayment
Your monthly payments are put towards paying off interest and reducing the capital (hence why these are also referred to as capital and interest mortgages). In the early years more of your monthly payment goes towards interest than capital, with the reverse being true in later years. As long as you always make at least your full monthly payment on time, your mortgage is guaranteed to be paid off at the end of the term, making this a low risk choice suitable for those with a cautious attitude to risk.
Interest-only
As the name suggests, with this repayment method you are only paying back the interest owed each month. Therefore, the balance of your mortgage stays the same throughout the term. Your monthly payments will be lower than on an equivalent repayment mortgage but at the end of the term you will owe the same amount as you borrowed originally.
Typically interest only mortgages are set up with a separate repayment vehicle, such as an endowment, ISA or pension. Regular contributions are made into the repayment vehicle throughout the term of the mortgage, with the hope that it will mature by the end of the mortgage term to provide a lump sum to pay the mortgage off. This type of repayment method carries more risk, as paying the mortgage off at the end of the term is dependent upon the performance of the investment. However, there is the potential to pay the mortgage off early, or receive an additional lump sum if the investment performs better than anticipated.
Alternative ways of paying off the debt at the end of an interest only mortgage include, where applicable, sale of another property, inheritance, or sale of the mortgaged property.
Due to the fact that it is often difficult to predict the future availability and value of other assets, or the likely future performance of an investment, an interest only mortgage is only suitable for those with a more adventurous attitude to the risk of repaying their mortgage. When considering repayment vehicles we strongly recommend you speak to an independent financial advisor.
"Making sense of the home-buying process"
Whether you are buying your first home, or have done it before, it is always worth bearing in mind the basic steps you will encounter during a house purchase.
Looking into mortgage options - find out how much you can afford to spend, either by doing your own research or by speaking to a mortgage adviser at logicfs.co.uk. It is recommended that you obtain an agreement in principal at this point, which we can arrange for you, so you can be surer of the availability of a mortgage. Look into the cost of moving and the additional costs of running a home, such as insurance and utility bills.
Searching for your ideal home - Register with Estate Agents and research online to find properties in your search area. Let them know you have already researched your finances and so are in a good position to proceed. View as many likely properties as possible to get a good feel for the price you should pay when you find your ideal home.
Tie up a deal - Having found your ideal home, begin negotiating on price until you and the vendors are in agreement. This is usually done via the selling agent. At this point you should instruct your solicitor and confirm the best mortgage deal, either by speaking to your adviser or doing your own research.
Apply for your mortgage and pay for survey - Complete your mortgage and, where relevant, your protection applications. You can do this by speaking to your logicfs.co.uk adviser. At this point the survey will be instructed on the property you are buying.
Mortgage Underwriting and legal enquiries - Your lender will obtain any necessary supporting documentation and references. Upon receipt of draft contract paperwork from the vendor's solicitor, your solicitor will instruct searches and begin their work. As and when any legal queries arise enquiries will be sent between solicitors.
Mortgage formally agreed - Once satisfied that everything is in order with your mortgage application the lender will issue your mortgage offer.
Pre-exchange signing - Once both solicitors are happy with the details of the contract you will be required to sign the necessary documents and pay your deposit to your solicitor in readiness for exchange of contracts.
Exchange of contracts - At this point both buyer and vendor are legally bound to proceed. The completion date is set at this point and your solicitor will arrange for your mortgage monies to be sent in time for completion.
Completion - This is when all monies for purchase are transferred to the seller, and the property legally becomes yours.
Move in - Time to plan the house warming party!
While this is the general process there may be instances when it is subject to change. Your solicitor and mortgage adviser should be able to guide you through your particular purchase.
"Making sense of valuations and surveys"
There are three types of property inspection to choose from. Your property is a significant asset and you should make sure you are entirely satisfied that it is of the standard you require before going ahead with a purchase.
The valuation for mortgage purposes
This is the most basic type of survey and is carried out to ensure that the lender is happy to use the property as security for your mortgage. Although you will often meet the cost of this, and may get a copy of the report, you must remember that a Valuation for Mortgage purposes is done on the lenders behalf NOT yours.
A Homebuyers Survey
This is an inspection of the property for your benefit, which will usually include a valuation for mortgage purposes. It is more expensive, but can provide useful information on the overall condition of the property, helping you make a more informed choice as to whether to proceed. Only tending to focus on more superficial problems, it is not generally suited for older properties built before around 1900, or properties of unusual construction.
A Full Buildings Survey
This is the most detailed type of property inspection. It does not usually include a valuation for mortgage purposes. It is more likely to uncover hidden problems than home-buyers survey.