What is a mortgage?
Oracle Consultants makes it easy to secure the best mortgage deal whether you’re a first-time buyer, looking to move home, or are re-mortgaging.
A mortgage is like any other loan where you borrow money and pay it back with interest over time. The difference is that it is secured on your home, which means the lender can sell it to recover their money if you do not keep up with payments.
Oracle Consultants helps you secure the best deal while making sure you understand all the terminology and types of mortgages.
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How do mortgages work?
There are a few different types of mortgages and methods of repayment, buy they all essentially come down to taking out a loan based on how much you can afford and on the value of the property. You will then make regular repayments, including interest (or pay only the interest with an interest-only loan).
Buying property as a long-term investment: Buy-To-Let Mortgages
Buy-To-Let properties are a long-term investment because they enable you to generate a rental income and possibly make a profit if you decide to sell. It’s also worth noting that Buy-To-Let mortgages come with some extra risk because they are usually not regulated by the FCA. We can advise you on this matter.
Repaying the mortgage
You can choose between two types of mortgage ( or a combination of the two )
Each month you’ll reduce the amount you owe by making payments plus interest to the lender.
This is the much simpler option, but you’ll be paying more interest in the early years.
You won’t be reducing the amount you owe because you’ll only be paying the interest, but this means lower monthly payments.
You’ll need to make sure you have a way to repay the loan at the end of the term, for example through an investment or savings plan.
Choosing your mortgage features
To get a mortgage deal that’s right for you, you’ll need to look at the different features lenders offer on their mortgages:
Cashback Mortgages: This could be offered with an interest-rate deal – the lender pays you a substantial sum (e.g. 3-5% of the amount you borrow shortly after you take the loan). This can be used to buy things such as furniture for a new property.
Flexible Mortgages: This gives you the option to change monthly payments, e.g. to pay less when you can’t afford the full amount, or to pay more when you want to pay off your loan more quickly.
You also have the option to borrow more without further approval from the lender.
Offset Mortgages: Your main current account and /or savings account is linked to your mortgage value. The more you have in these accounts the less interest you pay on your mortgage value, and so the quicker the money owed reduces. This benefits those who are higher rate taxpayers and have substantial savings.
Current Account Mortgages: This is similar to an offset mortgage, but here your mortgage value and current accounts are combined into one account and so your account acts like one big overdraft. This benefits those who are higher rate taxpayers and have substantial savings. Oracle hires only the best mortgage advisers in London, and so you will get the best advice on choosing the right type of mortgage.
|Type Of Interest Rate Deals||How Does It Work?||Early Repayment Charges||What Does It Mean For You?|
|Standard Variable Rate||Your payments move up or down with the lender's own mortgage rate, which is usually driven by the Bank of England's base rate.||Not usually, but check and see.||Usually you can leave your lender without any penalties or problems. You're in control. You can usually pay back extra amounts (and cut your interest costs) without a penalty. It moves with interest rates. So if interest rates go up, so will your monthly payment. It will almost certainly be expensive compared to other deals. The lender may not reduce, or may delay reducing, their variable rate even if the Bank of England rate goes down.|
|Tracker Rate||A variable rate loan with an interest rate that's at a set amount above or below the Bank of England or some other base rate, set independently from the lender. It tracks (moves up or down with) that rate.||Sometimes during any special deal period and maybe even after the period too.||It can pay to go for a tracker if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. It's not a good choice if your budget won't stretch to higher monthly payments.|
|Discounted Interest Rate||Your monthly payments can go up or down, but you get a discount on the lender's standard variable rate for a set period of time. At the end of the deal, you usually change over to the standard variable rate.||During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.||It gives you a gentler start to your mortgage, at a time when money may well be tight. But you must be confident you can afford the payments when the discount ends. The discount period is limited, so don't get used to those early low repayments. You may not be able to make overpayments and pay off the loan early without penalties. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down.|
|Fixed Interest Rate||Your payments are set at a certain level for an agreed period. At the end of that period, they'll usually switch you to the standard variable rate.||During the special deal period: yes, almost always. They can apply even after the special deal period, too.|
|Capped Rate||Your payments are variable and often linked to a base rate, but fixed not to go above a set level (the 'ceiling' or 'cap') during the period of the deal. At the end of the period, you are usually charged the lender's standard variable rate.||During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.||During the special deal: yes, almost always. They can apply even after the end of the special deal period as well. You know the maximum you will pay for a set period of time. Useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall.|
|Collared Rate||May be used in conjunction with a capped rate or a tracker (or both). Your payments are variable but will not fall below a set level (the 'collar').||Not usually, unless it is used in conjunction with a capped rate or a special-deal tracker rate (or both). But check and see.||It may be part of another interest-rate deal which otherwise appears attractive. But note that if the rate payable is only just above the 'collar' and you think rates will fall, you may not get the full benefit of a reduced payment.|
Get in touch with Oracle for the best mortgage deals
Call 020 7112 8842 or email email@example.com to talk to an adviser at Oracle Consultants and we’ll help you secure a mortgage advice with features and rates that are right for you.
The fee we charge for mortgage advice depends on your circumstances, but a typical fee is £495.
We consider ourselves to be among the best mortgage advice in London. We would love to hear from you.
We’re regulated by the FCA
Oracle Consultants Limited is authorised and regulated by the Financial Conduct Authority for pure protection, residential mortgages and general insurance business. You can check this on the FCA’s Register by visiting the FCA’s website www.fca.org.uk.
Oracle Consultants is regulated by FCA, commercial mortgages and most buy-to-let and offshore mortgages are not regulated by the FCA.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.