Mortgages

These pages contain a summary of some important information on the different mortgage options.For full details and expert advice please contact us on 0845 602 5541 or complete our online enquiry form.

Repayment Mortgages - a repayment mortgage is one where all the money you borrow at the outset will be repaid over the agreed mortgage term (normally 20 or 25 years), along with the interest on the borrowing.The payments in the early years will mainly be made up of interest with a relatively small amount of the monthly repayment going towards reducing the original capital amount you borrow.Over the term of the mortgage this changes with more and more being paid towards the capital.At the end of the term the mortgage has been repaid in full from the monthly payments and you are free to either continue to live in the property mortgage free or sell the property without the worry of any mortgage to be repaid.

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Interest Only Mortgages - these differ from repayment mortgages in that, during the course of the mortgage you are only actually paying the lender the amount of interest which is due on the loan amount each month.The original capital amount you borrow does not reduce and you will still owe this at the end of the term.If you choose this option you should have some form of repayment plan in place to repay the original borrowing when the mortgage comes to an end.

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Remortgages - you can choose to remortgage to another lender at any time but you will normally have early repayment charges during the first few years of your mortgage - normally payable over the same period as any discounted or fixed rate you received when you arranged your current mortgage.You may also have to repay any incentives you received from your current lender such as a free valuation or help towards legal fees.You should check the Letter of Offer you received at the time which should contain this information.Normally the best time to remortgage is at the end of any special rate term and when any early repayment charges have expired.Most lenders offer a free legal service for remortgages and may help with the cost of your valuation.

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In order to avoid paying more than you need to when your fixed or discounted rate expires, you should start looking for the best deal about 8 weeks before your current one ends.This normally gives you enough time to find the right deal, apply and complete all the paperwork.Most lenders won't write to tell you your monthly payments are changing until closer to the time and by then it may not be possible to rearrange your mortgage in time to avoid making an initial payment at their follow on rate.

Fees - there are numerous fees you need to consider when arranging a mortgage:

• Booking fee - normally payable on fixed rate products to secure the particular rate you want on your mortgage.Can be payable up front but some lenders will allow you to add this on to the mortgage when it completes.
• Product fee - part of the product pricing and the general principle is that the higher the fee you are willing to pay, the lower the rate you can get.There is generally a trade off between the size of product fee you pay and the interest rate on your loan.Again, most lenders will allow you to pay this on completion of the mortgage and add it onto the loan if you wish.
• Valuation fee - the cost of having the property you are buying or remortgaging valued.Normally the lender will arrange this for you.Some will expect you to pay for this up front and may refund the cost (or part of it) on completion or they will pay the cost for you.
• Legal fees- these will be payable to the solicitor who carries out the legal work on your behalf.For house purchases you should normally arrange for your own solicitor to do this work and the lender may make a contribution to the cost of this when the mortgage completes.For remortgages, lenders will often provide you with a free service if you choose to use their solicitors. However you are free to use your own, should you wish, although you may have to pay the cost of this yourself.
• Broker fees - some mortgage advisers will charge a fee for their services.This will typically be a set, flat amount or a percentage of the loan amount.Either way, they will require to disclose this to you at the outset and it will be confirmed in the Key Facts Illustration they give you on the product they recommend. Dedicated Mortgage Solutions provide an initial free consultation to meet your mortgage and protection needs. We normally charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee is £295.

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Fixed, discounted or tracker rates - most lenders will offer you different types of interest rate options on your mortgage.The most common are:

• Fixed rate - this is where the interest rate and your monthly payments are set for a fixed period - normally somewhere between 2 and 5 years, although some fixed rate products are now available for longer.At the end of the fixed rate period your mortgage will normally go onto the lenders standard variable rate and your payments will change accordingly.Fixed rates are a good way of giving you certainty as to what your monthly payments will be for an agreed period.If you wish to repay your mortgage within the fixed rate period however, there will be an early repayment charge payable to the lender.
• Discounted rate - this is where you receive a discounted rate (normally off the lenders standard variable rate) for an agreed period - normally 2-3 years.At the end of the discounted rate your mortgage would normally go onto the lenders standard variable rate and your payments would increase accordingly.Discounted rates are a good way of reducing your initial monthly payments but can vary should the lenders standard variable rate go up or down during the discounted period. If you wish to repay your mortgage within the discounted rate period however, there may be an early repayment charge payable to the lender.
• Tracker rates - this is usually where the interest rate on your mortgage tracks the Bank of England base rate at an agreed margin above or below it for a set period.This may be for a period of 2-3 years or it may be for the life of the mortgage.

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