Why Use BLG Wealth Mortgage Services
Many people still go to the lender for their mortgage where they have their salaries paid, or hold their cash savings, as in many instances they do not want to spend endless hours going from one lender to another.
BLG Wealth are an independent whole of market mortgage broker. This means that we can source the most suitable mortgage for you, with a small number of exceptions, from the complete range of UK lending institutions. We have no affinity with a particular lending provider so you can be assured that the recommendations we make are solely based on your personal requirements.
Professional advice on:
We offer independent advice on:
Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
This information does not represent financial advice and is not suitable for everyone – therefore if you have any questions as to its suitability for you, you should seek financial advice.
Tax treatment is based on individual circumstances and may be subject to change in the future.
Different types of mortgages
Each mortgage repayment paid to the lender, usually monthly, is for the interest only and therefore the capital sum outstanding does not reduce. Lenders are now obliged to satisfy themselves that borrowers can repay the mortgage sum at the end of the term, This may mean by the owner selling the property, but there are other options that will need to be evidenced by the lender at the time of application.
There are strict criteria applied for interest only mortgage applications and these are harder to obtain than standard repayment mortgages.
Each mortgage repayment to the lender includes interest and a small amount of capital. Therefore, following each monthly payment, there is a reduction in the amount you owe the lender until at the end of the mortgage term the full mortgage debt is finally repaid. The mortgage term can run as long as 35 years although most lenders place an upper age limit of around 80 for the expiry of the mortgage term.
Remortgages are far more commonplace now and in essence are new mortgages taken out without the borrower moving home.
The main reasons for taking out a remortgage are to:
- reduce monthly mortgage repayments
- consolidate debts
- release equity from the property
- take out a more appropriate mortgage
NOTE: there are potential penalties and disadvantages of remortgaging and it is important to seek professional advice before making any decision.
As the name implies a fixed rate mortgage is where the rate of interest is set for a period of time eg three years. During this fixed term, the rate of interest will remain the same no matter what is happening to the Bank of England or High Street lender rates of interest. At the end of the fixed term your mortgage will be automatically transferred to the lenders standard variable rate. At this point, many borrowers will consider other options with the same lender or remortgage with another lender.
A tracker mortgage rate follows the movements of another rate usually the Bank of England Base Rate. The important factor to consider with tracker mortgages is that interest rates can move up or down during the term of the mortgage. Normally you can select an option that tracks for two, three or five years before this expires and then your mortgage will be transferred to the lenders standard variable rate. The same options will apply as they do with a fixed rate mortgage.
An offset mortgage is designed to use the money in your saving accounts to help offset the interest you pay on your mortgage repayments. Quite simply the more you have in your saving accounts the more you will save on your mortgage repayments.
One of the great benefits of an offset mortgage is that you can reduce your mortgage repayments, or your mortgage term, whilst still having access to the money in your saving accounts.
You have a mortgage of £100,000 and a total of £30,000 in your saving accounts. With an offset mortgage, the mortgage interest will be calculated on the net balance of assets and liabilities being £70,000. This could save thousands of pounds over the mortgage term.
A capped rate mortgage is a variable rate which has the benefit of having a maximum rate of interest eg if the rate was capped at 6%, the rate can go up or down as long as the rate you are paying is below the 6% cap. It will not go higher than the 6% cap during the period of the cap no matter what happens to general interest rates in the meantime.
Again, capped rates are usually for two, three or five years and once this term expires your mortgage will be transferred to the lenders standard variable rate. The same options will apply as they do with a fixed rate mortgage.
A discounted rate is where the lender is providing you a discount from their standard variable rate. As with trackers, it is subject to movements up and down and is normally offered for the same two, three or five year periods.
A drop lock mortgage is a tracker mortgage which has the option to be switched to a fixed rate if general interest rates begin to rise. A useful benefit of this type of mortgage is that normally you will not incur any early repayment or redemption charges.
A shared ownership mortgage allows people to purchase a percentage of a property with normally a local council or housing association purchasing the remaining share. The individual will pay a rent on the share of the property they do not own. The contract will allow you to purchase further shares in the property overtime until eventually you could own the property outright.