Whether buying your first home or buying an investment property having the correct finance in place is one of the most important things.
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General Information on Mortgages
Fixed - With a Fixed Rate mortgage you pay a fixed interest rate for a fixed period of time and the rate and duration are arranged at the beginning with the lender. This can be between 1 and 25 years, though the standard term would be 2 years.
Tracker - With a Tracker Rate mortgage the rate of interest you pay is tied to the base rate set by the Bank of England. Typically, a tracker rate mortgage will be set at a certain percentage above the Bank of England base rate. Although the Tracker rate is usually lower than the lender's Standard Variable Rate, this can differ from lender to lender.
Discounted - A Discounted Rate Mortgage is linked to an individual lender's Standard Variable Rate. The lender may offer a discount to their variable rate for a specified period of time, but be careful as there is no certainty as to what your future payments will be.
Buy-to-Let - Buy-to-let mortgages are for investment properties that are not occupied by the owner. Some lenders will only consider a property's rental income as the basis for determining whether or not to lend while other lenders will consider your normal earnings, especially if you only have one or two rental properties.
The expected rental income must exceed your mortgage repayments by a certain percentage. For example, your mortgage lender may require a rental income of 125%-130% of your monthly mortgage payments.
Generally, Buy-to-Let mortgages are available for between 5 and 45 years and for a maximum of 80% of the property value. When considering a Buy-to-Let mortgage, certain additional costs must be considered, including lettings agent fees, insurance, legal cover and the cost of maintaining the property in a suitable condition for letting.