Craig Adams Mortgages

This mortgage type allows you to repay capital borrowed gradually over the set period of the loan, this is repaid in monthly instalments along with any interest. Providing these payments are consistently made over the duration of the outlined mortgage you will be guaranteed to clear the full amount borrowed. The amount of capital which is repaid gradually increases over the years whilst the amount of interest goes down. Most residential mortgages are on a repayment basis.

With interest-only mortgages, you only pay off the interest on the amount you borrow. You can use savings, investments or other assets you have (known as ‘repayment plans’) to pay off the total amount borrowed at the end of your mortgage term.

As the name suggests, the interest rate is set at a certain level for a set period – this is usually two, three or five years, although occasionally longer-term fixed rates are available. During that period your rate is guaranteed not to change. When it comes to an end you will usually move onto your lender’s standard variable rate (SVR).

The rate you pay is attached to another rate, usually the Bank of England base rate. It is a set margin below or above that rate for a set period – for example, 1% above base rate for 5 years. During that time, it moves up or down if the other rate changes. Some trackers track rates set by the lender and some track the London inter-bank offered rate (LIBOR).

The interest rate is a set margin below the lender’s SVR for a set period, and during that time it moves up or down as the SVR changes. Discount rates are normally for two or three years.