Which mortgage type is right for you?
Unless you’re lucky enough to have the cash in the bank when you buy a property, you’ll need a mortgage. The type of mortgage you’ll need will depend on what you’re doing with the property.
Different types of mortgage include;
- Repayment mortgages
- Interest-only mortgages
- Combined mortgages
- Buy-to-let mortgages
- Commercial mortgages
The majority of mortgages taken out in the UK are used to buy homes. Still, other mortgage types allow you to buy a property and rent it out or buy a business premise such as a shop or office.
I want to buy a home
Then you’ll need one of three types of mortgages
- Repayment mortgage
- Interest-only
- Combined rates
Read our guide to buying a property.
What is a repayment mortgage?
A repayment mortgage is a loan where the monthly payments will eventually pay the whole amount owed back. First-time buyer mortgages typically range from 25-35 years.
What is an interest-only mortgage?
Usually a lower monthly payment than a repayment mortgage, an interest-only mortgage only pays the interest on the loan. At the end of the mortgage, you’ll still owe the same amount.
What is a combined rates mortgage?
A blend of repayment and interest-only, so at the end of the mortgage term some of the loan will be paid off.
I’m buying a property to rent it out
You need a buy-to-let mortgage if you plan to buy a property and rent it out to tenants. Most of the criteria for a buy-to-let is the same as a standard mortgage.
I’m buying business premises
If you want to buy business premises, such as an office or a shop you’ll need a commercial mortgage. Commercial mortgages are available as both repayment or interest-only – your financial/mortgage advisor will be able to advise which is best for your business.
Why use a mortgage advisor?
The benefits of mortgages advisors, like Friends Capital, is that they are independent from individual lenders. Being independent means, they look at the whole marketplace to make sure you get the best deal based on your circumstances.
The most significant benefit is that they put care and attention into every single mortgage application. The ensures it has the very best chance of being accepted by the lender.
Friends Capital are unbiased mortgage advisors, contact them today for advice.
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