It’s a great time to buy with competitive interest rates. Don't make do. Buy New!
The Bank of England has reduced the base rate to a historic low of 0.25% - which means that there are great mortgage deals to be had right now.
Interested in finding out more? Visit a Taylor Wimpey development and speak to one of our Sales Executives. They can put you in touch with an Independent Financial Advisor (IFA), who will be able to offer tailor made mortgage advice for your personal situation.
Interest rates - the facts
In your monthly mortgage repayments, an element will go towards repaying the loan, and an element will go towards paying the interest due on it.
The amount you repay on a monthly basis depends on the amount you have borrowed, the length of time you choose to repay the mortgage and the interest rate on the mortgage.
Here are the main types of mortgage rate...
Fixed rate mortgage
Your monthly repayment amount will be fixed for a specified period. The rate will not change, regardless of any changes to the lenders standard variable rate or the Bank of England's base rate.
A fixed rate mortgage scheme will usually last between two to five years but could be as long as ten years. Once the fixed rate period is over, the interest rate will revert to the lenders standard variable rate.
If you decide to cancel your mortgage within than time, you may have to pay an early redemption penalty.
However, some mortgage lenders offer fixed rates with the flexibility to make unlimited overpayments without being charged an early repayment fee.
Variable rate mortgage
A variable rate mortgage is based on the lenders standard variable rate.
Lenders standard variable rate is affected by the movement of the Bank of England's base rate. Usually variable rates stand at around 1.5%-3.5% above the Bank of England base rate, but they do vary from lender to lender.
The lender is under no obligation to change the standard variable rate in accordance with the movements of the Bank of England base rate. A tracker rate mortgage will offer this option.
Tracker rate mortgage
A tracker rate mortgage is set a certain amount above the Bank of England’s base rate, so any changes to the base rate will affect a tracker rate mortgage.
So for example, if the Bank of England base rate stands at 1%, and the mortgage offered by the lender is 1% above base rate, the tracker mortgage rate would stand at 2%, until the Bank of England base rate changes. The benefit to the borrower is that all falls in Bank of England interest rates are passed on to them; but on the flip side, all increases are also passed on.
Tracker rates are particularly attractive if interest rates look set to remain broadly stable or fall during the deal period.
If you have the flexibility within your personal finances to adapt your payments in reaction to interest payments, you may also feel that a tracker rate mortgage is right for you.
Tracker rate mortgage periods can vary between 2, 3, 5 or 10 year mortgages, and once the term is up the mortgage will revert to the lenders standard variable rate.
A discounted mortgage can be a good opportunity for first time buyers.
They offer customers the option to pay a discounted interest rate for an agreed set period of time, so that they pay a lower monthly amount during the initial years of their mortgage.
This can be useful for first time buyers who may prefer to spend money on other things during the first years of home owning.
For information on all the options above, we would recommend you speak to an Independent Financial Advisor (IFA) who will be able to offer tailor made advice for your personal situation.
Want to know more?
Visit a Taylor Wimpey development and speak to one of our Sales Executives. They can put you in touch with an Independent Financial Advisor (IFA), who will be able to offer tailor made mortgage advice for your personal situation.