When it comes to mortgages, the two main types are:

REPAYMENT MORTGAGES

Most people opt for a repayment mortgage.

This means each monthly payment clears the interest and some of the capital borrowed.

Over time, you pay less interest and more capital, reducing the amount remaining on loan.

REPAYMENT MORTGAGES

INTEREST ONLY MORTGAGES

INTEREST ONLY MORTGAGES

These are only used in Buy to Let purchases. The idea is to repay only the interest accrued on the loan during its term, and then repay the capital at the end of the term. A lender would only offer you an interest only deal if you could prove you have clear plans in place for clearing the lump sum you originally borrowed. They can also periodically ask you at any stage of the loan’s life to confirm your plan for repayment is going as planned.

...and when it comes to the type of loan, there are many variations:

- DISCOUNT

This product offers a discount off the usual standard variable rate offered by that lender (you’ll need to compare deals and discounts from different lenders to get the best one)

- FIXED RATE

This means you borrow at a fixed rate of interest for a specified period, i.e. two, three, or five years

- VARIABLE RATE

The interest rate can go up or down at any time

- OFFSET

This requires you to have your mortgage, savings, and current account all with the same provider; instead of receiving interest on credited amounts, this is offset against your loan interest rate

- TRACKER

This rate is set a specified amount above the Bank of England base rate, so while it can go up or down, it will only do so via the tracked rate.

Consider which type of loan you would prefer.

Would you like to have the safety of a fixed rate deal that fixes your repayment amount each month for several years? Variable rates are cheaper, but you lose the certainty of knowing what each repayment amount will be worth.

Mortgage Options

Click on the headings below to read more about each mortgage option.

First Time Buyer

Buying a house is one of the most important purchases you will make, and whilst it's a really exciting time, buying a home for the first time will still be daunting. There is a vast array of mortgage products available from a wide range of sources so you could be left with a high-stress, confusing decision to make. Good news though, first time buyers often receive incentives such as cash backs on completion which can go a long way to helping you in the first couple of months.

Remortgage

When you remortgage, you are switching your mortgage to another deal, and frequently, another lender. Remortgages can be used for various reasons but most people simply switch mortgages because monthly payments will work out cheaper for them. For example, if the introductory discounted interest rate has finished with your current lender, you could potentially secure a new discounted rate, or a lower APR, with another lender.

However, It is worth noting that a remortgage is not the best option in all cases. Even if the lender you are considering switching to is offering a lower APR, you must take into consideration that the new lender may charge you for valuation and solicitors fees, even if you have already paid these for your mortgage with your current lender, and you may have to pay an early repayment charge to your existing lender if you re-mortgage. It may also be that you can switch your mortgage deal with your current lender, avoiding any unnecessary costs. Many lenders will allow you to switch your mortgage deal reasonably frequently. If you do switch mortgage remember to look at the overall repayment period. You may be able to pay less monthly, but check the final repayment date of the mortgage as well.

Another reason to remortgage is when you may need to consolidate debts. However, Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service these services may be more suitable for you.

Buy To Let

Becoming a private landlord certainly should not be seen as an easy way of making money - it can be riskier and more complicated, together with being very time consuming compared to most forms of investment. Added to that, there is no guarantee that house prices will rise. But that said, having a second property to let to tenants could reap considerable financial rewards over time.

There are 3 main differences in buy to let mortgages:

Rent Potential - the decision as to whether or not a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases your income is not ever considered.

Interest Rate - buy to let mortgages have slightly higher interest rates.

Larger Deposit - typically a minimum of 20% or 25% of the property's value is required as a deposit. When choosing a property to let, it is wise to take advice from local letting agents to determine what types of properties are in need and which parts of the town are best or most wanted.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES

Let to Buy

Let-to-buy is when you rent out your existing home and buy a new one to live in. Essentially, it involves having two mortgages at the same time. You convert your existing mortgage to a buy-to-let mortgage so you can let out your current home, and then take out a standard residential mortgage on the home you're buying.

There are various considerations and complications with let-to-buy, including the costs and challenges of becoming a landlord and the need to manage two mortgages. There are a number of reasons you might be considering let-to-buy. The most common is to use equity you've built up in your home to enable you to move to a new one, while also keeping the existing home as a long-term investment.

Let-to-buy could also be suitable for homeowners in the following situations:

- You're in a hurry to move to a new home and can't wait to sell your current property

.- You have struggled to sell your home due to market conditions.

- You want to buy a property with a partner but maintain ownership of your current home.

- You're moving elsewhere for a few years but plan on moving back to your home in the future.

Let-to-buy has lots of moving parts, and many buy-to-let mortgages are only available through brokers rather than directly from lenders, so we will be able to access deals you won't be able to get on the high street.

Home Mover

Nowadays most home mortgages are portable, which means you can move your current mortgage over to your new property. You will still have to go through the application process for your loan, and you may have to increase the size of the mortgage to cover the cost of your new property if it's more expensive than your current home.

If you need to increase the size of your loan, your lender will often require you to take out a separate mortgage that covers the difference in price. This will come with the added cost of a new arrangement fee, so it is important to check how much this would be. The additional loan could also have higher interest fees than your original mortgage, so watch out for this too.

Equity Release

Equity release is a means of retaining use of your home, while receiving a lump sum or a steady stream of income, using the value of the house. The income-provider must be repaid at a later stage, usually when the homeowner dies or upon sale. Equity Release is a specialised area and as such, we can provide expert individual advice on request.

Read more on Equity Release here

EQUITY RELEASE MAY INVOLVE A LIFETIME MORTGAGE OR HOME REVERSION PLAN, TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

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Lakes Mortgages is directly authorised and regulated by the Financial Conduct Authority under reference 605694. Registered in England and Wales No: 8633133. Registered Office: Ground Floor Office, Quarry Warehouse, Sandside, Milnthorpe, Cumbria, LA7 7HG. Calls may be recorded for training and monitoring.