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Your home may be repossessed if you do not keep up repayments on your mortgage.

For mortgages we give clients the option to pay by fee rather than commission. The level of fees will vary according to individual circumstances, but will typically be 0.5% of the loan amount.

Fixed Rate Mortgages

  • Fixed rate means that the interest rate is guaranteed to remain unchanged for a specified period.  When the fixed rate period ends, your mortgage reverts to the standard variable rate.  You need to be sure that you have budgeted for, and will be able to afford, the increased payments at the end of the fixed rate period.
  • With a fixed rate mortgage you will pay the fixed rate of interest regardless of what happens to interest rates generally. The Bank of England decides whether interest rates go up or down, however while you are on a fixed rate mortgage these changes will not affect you, so if the interest rate goes up, your payments will not go up and if the interest rate goes down then your payments will not be reduced.
  • A fixed rate mortgage is a good option for people who like the security of fixed monthly mortgage payments so that they can budget and plan ahead. It may also be a good option if you plan to stay in your home for several years.
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A 2 fixed rate of 3.50% for 2 years means that the mortgage payments will remain the same for 2 years after which point the rate will revert to the standard variable rate of the lender.

Variable Rate Mortgages

  • A variable rate mortgage is a mortgage where the rate of interest you pay varies throughout the term of the loan. In terms of a UK mortgage, the amount of interest you pay on your mortgage will be linked to the Bank of England base rate, so when this moves up or down then it is likely that the rate of interest you pay on your mortgage, and therefore your monthly mortgage repayments, will do something similar.
  • An important point to remember is that the Bank of England base rate is unlikely to be the rate of interest you pay on your mortgage. Although there are a variety of variable rate mortgages, the main one for most mortgage lenders is a standard variable rate mortgage. This mortgage is based on a rate of interest set by the mortgage lender, which is often not directly related to the Bank of England base rate. It will however be higher than the Bank of England base rate and will almost certainly go up when the Bank of England base rate goes up and may come down when the Bank of England base rate
    comes down.
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A variable rate of 3.50% will mean the monthly payments will are linked to the variable rate of the lender and as such will follow the movement of the variable rate up and down.

Discounted Mortgage

  • A discounted mortgage mirrors what the lender’s variable rate at a defined percentage rate above or below the variable rate for a pre-determined length of time.
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A 2 year discounted rate of 2.00% off the lender’s variable rate of 3.50% means that if the lender’s variable rate increases to 5.0% your discounted mortgage interest rate will be 3.00%. If the lender’s variable rate then moves down to 2.5% then your discounted mortgage interest rate will change to 0.5%. At the end of the 2 year period your rate reverts to the lender’s variable rate at the time.

Tracker Rate Mortgage

  • A tracker mortgage, sometimes known as a base rate tracker mortgage – mirrors what the Bank of England base rate does at a defined percentage rate above or below the Bank of England base rate.
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A 2 year tracker of Bank of England base rate plus 0.5% means that if the Bank of England base rate is 0.5% your tracker mortgage interest rate will be 1.0%. If the Bank of England base rate then moves up to 2.0% then your tracker mortgage interest rate will change to 2.50% and if the Bank of England base rate goes down to 0.25 % then your tracker mortgage interest rate will be 0.75%. At the end of the 2 year period your rate reverts to the lender’s variable rate at the time.

Capped Rate Mortgage

  • Capped rate mortgage options help you to budget. Interest rates on a capped rate mortgage can move up and down with the market, but will never exceed a specified top level – ‘the cap
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A 2 year capped rate of Bank of England base rate plus 0.5% means that if the base rate is 0.5% your tracker mortgage interest rate will never rise above 1.0% (i.e. Bank of England base rate plus 0.5%). At the end of the 2 year period your rate reverts to the lender’s variable rate at the time.

Flexible Mortgage

  • A flexible mortgage (or ‘lifestyle’ mortgage) simply allows you some variations in what you pay and when you pay it. So you might fancy taking a month off repayments (perhaps you’ve just come back from holiday), or indeed you might pay an extra lump sum in because of an inheritance.
  • This also often ties in with ‘offsetting’- allowing you to have your savings and mortgage account with the same company, which lets you offset the interest on your savings against your mortgage.
  • IDFM (City) Ltd will carry out a full analysis to present your best remortgage option(s).

Example

A 2 fixed rate of 3.50% for 2 years means that the mortgage payments will remain the same for 2 years after which point the rate will revert to the standard variable rate of the lender.

Please contact IDFM on 0845 2706160 for further information
or email peter@idfmcity.com
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