Exploring the different types of mortgages

Take time to think about what you want and how much you’ll be able to afford

Taking out a mortgage can seem daunting, and it often feels like the lender holds all the cards. So it is worth spending exploring the different types of mortgages available.

Each lender employs its unique criteria to determine whether or not they wish to lend to you. You’ll likely receive swift approval if you fit neatly within a lender’s parameters. However, if your circumstances are less than ideal, you’ll likely face rejection.

Selecting the appropriate mortgage might seem like a labyrinthine task. Still, you must make an informed decision taking your financial wellbeing into consideration and not get swamped by myriad options. This is particularly important for first-time buyers. To aid you in feeling as confident as possible, we’ve collated the primary different types of mortgages so you know precisely what you’re seeking.

Repayment versus Interest-Only Mortgages

Mortgages fall into one of two categories:

  • Repayment
  • Interest-only

Repayment mortgages, sometimes called capital and repayment mortgages, enable you to borrow enough to purchase a property (less your deposit) and repay that total sum, along with interest, over a specified period.

Interest-only mortgages allow you to borrow sufficient funds to buy a property (again, less your deposit) and then only pay interest on that amount until the end of the mortgage term. You will then repay the original sum, often by selling the property.

Most individuals planning to reside in their property tend to opt for a repayment mortgage. Not all lenders offer interest-only options and those that do typically impose stringent criteria, such as a substantial deposit and a pre-approved repayment method in place to offset the capital at the end of the term.

Many landlords manage their mortgages on an interest-only basis, and lenders generally accept this.

Fixed Rate or Variable Mortgages

Typically repayment mortgages are either fixed rate or variable. Fixed rate mortgages offer set monthly payments that remain unchanged for an agreed period – typically between two to five years, although occasionally longer. While the interest rate is often higher than for variable mortgages, you benefit from the certainty of knowing it won’t increase.

This could lead to savings in the long run. For instance, if the Bank of England’s interest rates rise during your fixed mortgage term, you’ll be relieved that your mortgage payments remain unaffected. Conversely, if the Bank of England interest rates fall, you’d probably prefer your mortgage payments to do the same – but that’s the trade-off for stability.

Variable mortgages feature monthly payments that fluctuate. They may follow the Bank of England interest rates, or they might not.

This depends on which type of variable mortgage you opt for from the following choices:

Variable Mortgages

Variable mortgages come in various forms, each distinguished by how the interest rate is calculated, determining your monthly repayments.

Tracker mortgages follow the Bank of England base rate, with a slightly higher interest rate. This means your monthly repayments will fluctuate in tandem with the base rate.

Standard and Discounted Variable Rate Mortgages

Standard variable rate (or SVR) mortgages are governed by an interest rate set by the lender. Consequently, your payments may vary at the lender’s discretion.

Conversely, discounted variable rate mortgages offer lower monthly repayments than the SVR, thanks to a temporary discount. Once this period concludes, you’ll transition to the standard variable rate.

Any variable mortgage can be capped, ensuring your monthly payments will never exceed a certain threshold. This cap provides some level of protection, though it’s often set relatively high, so careful consideration is advised before committing.

Broadening your mortgage horizons

Beyond the main mortgage types, there are other unique features to consider. Cashback mortgages provide a lump sum when you take out the mortgage but generally incur a higher interest rate on repayments.

Offset mortgages enable your cash savings to reduce the interest you pay on your repayments. By contrast, current account mortgages link your current account to your mortgage, potentially lowering the interest you pay.

Scrutinising aspects of ability to maintain repayments

Applying for a mortgage requires more than just the ability to meet monthly repayments. It’s essential to consider your income, expenditures and potential changes in your circumstances. Mortgage lenders will scrutinise these aspects to gauge whether you can maintain repayments should interest rates escalate or circumstances alter.

Calculations behind mortgage approvals

Mortgage lenders primarily base their decisions on the loan-to-income ratio. This is a simple calculation: the amount you desire to borrow is divided by your earnings. The maximum you can typically borrow is often restricted to four-and-a-half times your annual income.

Affordability assessment is a key determinant

Lenders also conduct an affordability assessment, considering your outgoings alongside your income to calculate the monthly payment you can manage. This crucial step helps them determine your financial capability and resilience in the face of changing circumstances.

Stress testing your ability to repay

Aside from assessing your present financial situation, lenders also contemplate the future. They perform a ‘stress test’ to evaluate your ability to repay the mortgage under different scenarios. This could include rising interest rates or lifestyle changes like redundancy, starting a family or taking a career break.

Lender’s discretion on loan amounts

If lenders perceive that you may struggle with your mortgage payments under these potential circumstances, they will typically limit how much you can borrow. This precautionary measure ensures that both you and the lender are protected from potential financial distress.

How can we help you on your mortgage journey?

Securing a mortgage is more than just paperwork. It requires thorough financial preparation. Before undertaking a mortgage affordability check or arranging a mortgage interview, ensuring your finances are in top shape is crucial. The great thing is, we have access to a comprehensive panel of lenders and we do not charge you a broker fee so book a call and let us see how we can help you choose the most suitable mortgage for your situation. 

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At Yes Mortgage Services, we offer a comprehensive range of products from across the market.

Irrespective of whether you are looking to buy a new home, re-mortgage an existing property, or looking to protect your family from the unpredictability that life throws at it or protect your income if you are unable to work due to accident or ill health.

Yes Mortgage Services are committed to offering you the highest possible standards of service. We can undertake the whole process from answering the initial questions through to handling multiple product applications. Ensuring that everyone gets treated with the same urgency and maintaining your best interests are our main goals irrespective of the value of the mortgage.

We recognise that both we and our customers have everything to gain if we look after your best interests and treat you fairly in all aspect of our dealings with you.

Yes Mortgage Services

Contact Us

YES Mortgage Services Limited
The Old Barn
Brooklands Farm
Mannington
Wimborne
BH21 7JU

Hours
Monday – Friday 0900 – 1700

Contacts
0800 612 5596
[email protected]

We don’t charge a broker fee

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If you're a member of the Armed Forces and need mortgage advice - we're here to support you.⁣
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We're a team of (ex-military) mortgage advisors, who understand the pressures you face and speak your language - from the terminology to the banter of service life. ⁣
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We can even read military pay statements! ⁣
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Visit our website to learn more (🔗 in bio)  or give us a call on 0800 612 5596.⁣
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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
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#raf #britisharmy #royalnavy #britisharmedforces #ukarmedforces #ukveterans #ukaf #forcesfamilies #ukveteranowned #forceshelptobuy

If you`re a member of the Armed Forces and need mortgage advice - we`re here to support you.⁣

We`re a team of (ex-military) mortgage advisors, who understand the pressures you face and speak your language - from the terminology to the banter of service life. ⁣

We can even read military pay statements! ⁣

Visit our website to learn more (🔗 in bio) or give us a call on 0800 612 5596.⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

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#raf #britisharmy #royalnavy #britisharmedforces #ukarmedforces #ukveterans #ukaf #forcesfamilies #ukveteranowned #forceshelptobuy
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The underwriting process is when the lender reviews your ability to repay a mortgage and decides whether they will approve the loan. It's a pretty important step in the journey to owning your dream home! ⁣
⁣
Though it may differ slightly between lenders, there are generally three parts:⁣
⁣
• Affordability⁣
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First, the lender will review your mortgage application to assess your financial situation. They'll look at your income, outgoings, and other financial commitments to determine if you can afford the monthly repayments.⁣
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• Creditworthiness⁣
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Next, they'll assess your creditworthiness. They'll scrutinize your credit history and any previous experiences with borrowing money.⁣
⁣
• Decision⁣
⁣
Finally, the lender will make the big decision whether or not to approve your mortgage!⁣
⁣
We’re here to help you through every step of the mortgage process and are always on hand to answer your questions.  Give us a call on 0800 612 5596. ⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.

The underwriting process is when the lender reviews your ability to repay a mortgage and decides whether they will approve the loan. It`s a pretty important step in the journey to owning your dream home! ⁣

Though it may differ slightly between lenders, there are generally three parts:⁣

• Affordability⁣

First, the lender will review your mortgage application to assess your financial situation. They`ll look at your income, outgoings, and other financial commitments to determine if you can afford the monthly repayments.⁣

• Creditworthiness⁣

Next, they`ll assess your creditworthiness. They`ll scrutinize your credit history and any previous experiences with borrowing money.⁣

• Decision⁣

Finally, the lender will make the big decision whether or not to approve your mortgage!⁣

We’re here to help you through every step of the mortgage process and are always on hand to answer your questions. Give us a call on 0800 612 5596. ⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.
...

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Retirement is an exciting time full of new adventures and quality time with your loved ones.⁣
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But getting a mortgage can be tricky, and that's where retirement interest-only mortgages come in.⁣
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During the term of the mortgage, you'll make monthly repayments to cover the interest. And the outstanding capital you owe will be paid off when selling the house, when you pass away, or if you transition to long-term care.⁣
⁣
If you’re looking for a retirement interest-only mortgage, and want to find out more, tap the link in our bio or call us on 0800 612 5596 to chat with one of our friendly advisors.⁣
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Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
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...⁣
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#retireuk #retirementuk #retirement #retire #retirementplanning #retirementmortgage #mortgagesuk

Retirement is an exciting time full of new adventures and quality time with your loved ones.⁣

But getting a mortgage can be tricky, and that`s where retirement interest-only mortgages come in.⁣

During the term of the mortgage, you`ll make monthly repayments to cover the interest. And the outstanding capital you owe will be paid off when selling the house, when you pass away, or if you transition to long-term care.⁣

If you’re looking for a retirement interest-only mortgage, and want to find out more, tap the link in our bio or call us on 0800 612 5596 to chat with one of our friendly advisors.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#retireuk #retirementuk #retirement #retire #retirementplanning #retirementmortgage #mortgagesuk
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Getting a mortgage on a non-standard property may involve higher interest rates or larger deposit requirements, but with careful planning and expert help, your dream home can become a reality!⁣
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Our team of experts are on hand to connect you with accommodating lenders and help negotiate favourable terms. Click the link in our bio to learn more.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.

Getting a mortgage on a non-standard property may involve higher interest rates or larger deposit requirements, but with careful planning and expert help, your dream home can become a reality!⁣

Our team of experts are on hand to connect you with accommodating lenders and help negotiate favourable terms. Click the link in our bio to learn more.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.
...

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Kelly is our dedicated insurance protection specialist. She joined the team in 2019, bringing nearly 20 years of experience in the financial industry and over 10 years in the protection sector 🌟⁣
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Her drive is to ensure people are protected as she has experienced first-hand how a loss can impact family and everyday life.⁣
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Kelly enjoys spending time with her friends, especially taking her nephews to Bournemouth football matches! And she has the most gorgeous King Charles Cavalier called Rufus 🐶 (who enjoys keeping her on her toes!)⁣
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If you need help deciding which individual insurance, specialist insurance, or general home insurance is right for you give Kelly a call on 0800 612 5596.

Kelly is our dedicated insurance protection specialist. She joined the team in 2019, bringing nearly 20 years of experience in the financial industry and over 10 years in the protection sector 🌟⁣

Her drive is to ensure people are protected as she has experienced first-hand how a loss can impact family and everyday life.⁣

Kelly enjoys spending time with her friends, especially taking her nephews to Bournemouth football matches! And she has the most gorgeous King Charles Cavalier called Rufus 🐶 (who enjoys keeping her on her toes!)⁣

If you need help deciding which individual insurance, specialist insurance, or general home insurance is right for you give Kelly a call on 0800 612 5596.
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Not all mortgages are created equal. ⁣
⁣
Let us help you navigate the maze of mortgage options and find the right match that aligns with your financial goals.⁣
⁣
We'll listen to your needs, guide you through the process, and recommend only the most suitable deals. Call us on 0800 612 5596 or send us a DM. ⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#movinghouse #buyingahouse #letsbuyahouse #housemove #newhome #housebuyingtips #movinghomes

Not all mortgages are created equal. ⁣

Let us help you navigate the maze of mortgage options and find the right match that aligns with your financial goals.⁣

We`ll listen to your needs, guide you through the process, and recommend only the most suitable deals. Call us on 0800 612 5596 or send us a DM. ⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#movinghouse #buyingahouse #letsbuyahouse #housemove #newhome #housebuyingtips #movinghomes
...

2 0
Timing is everything when it comes to renewing your mortgage...⁣
⁣
Starting the process around six months before your current deal ends can prevent you from being automatically switched to your lender's standard variable rate - which is often much more expensive!⁣
⁣
Our team of mortgage advisors are here to guide you through the world of remortgages and answer any questions you have. Click the link in our bio to learn more 🔗 or give us a call on on 0800 612 5596.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.

Timing is everything when it comes to renewing your mortgage...⁣

Starting the process around six months before your current deal ends can prevent you from being automatically switched to your lender`s standard variable rate - which is often much more expensive!⁣

Our team of mortgage advisors are here to guide you through the world of remortgages and answer any questions you have. Click the link in our bio to learn more 🔗 or give us a call on on 0800 612 5596.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.
...

2 0
A quick guide to the things that can impact the interest rate on your mortgage:⁣
⁣
• Type of mortgage - Variable rate mortgages often offer lower interest rates when compared to fixed-rate mortgages. The reason for this is that with a fixed rate, you're paying for the certainty of knowing what your monthly payments will be.⁣
⁣
• Debt-to-income ratio - This represents the amount you spend each month on debts, divided by your monthly income. Generally, a lower debt-to-income ratio can help you secure better rates.⁣
⁣
• Credit score - A higher credit score typically translates to a lower interest rate, while a lower score may result in a higher rate.⁣
⁣
• Loan-to-value ratio - Calculated as a percentage, the loan-to-value ratio represents the loan amount compared to the value of your house. Generally, a lower LTV can help you secure better rates.⁣
⁣
• Using a broker - Using a mortgage broker can give you an advantage in negotiating favourable mortgage terms. They have insider knowledge of available offers and rate discounts that may not be accessible when applying directly.⁣
⁣
If you're looking to secure a favourable rate, we can offer tailored advice and guidance to help you find the most suitable deal for your needs - and we don't charge a broker fee!⁣
⁣
Give us a call 0800 612 5596 or tap the link in our bio.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#movinghouse #buyingahouse #letsbuyahouse #housemove #newhome #housebuyingtips #movinghomes #mortgageinterestrates #interestrate

A quick guide to the things that can impact the interest rate on your mortgage:⁣

• Type of mortgage - Variable rate mortgages often offer lower interest rates when compared to fixed-rate mortgages. The reason for this is that with a fixed rate, you`re paying for the certainty of knowing what your monthly payments will be.⁣

• Debt-to-income ratio - This represents the amount you spend each month on debts, divided by your monthly income. Generally, a lower debt-to-income ratio can help you secure better rates.⁣

• Credit score - A higher credit score typically translates to a lower interest rate, while a lower score may result in a higher rate.⁣

• Loan-to-value ratio - Calculated as a percentage, the loan-to-value ratio represents the loan amount compared to the value of your house. Generally, a lower LTV can help you secure better rates.⁣

• Using a broker - Using a mortgage broker can give you an advantage in negotiating favourable mortgage terms. They have insider knowledge of available offers and rate discounts that may not be accessible when applying directly.⁣

If you`re looking to secure a favourable rate, we can offer tailored advice and guidance to help you find the most suitable deal for your needs - and we don`t charge a broker fee!⁣

Give us a call 0800 612 5596 or tap the link in our bio.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#movinghouse #buyingahouse #letsbuyahouse #housemove #newhome #housebuyingtips #movinghomes #mortgageinterestrates #interestrate
...

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We offer appointments outside normal working hours!⁣
⁣
So if you need mortgage advice in the evenings once the kids have gone to bed or at the weekend when you're not busy with work - we are available for you. ⁣
⁣
And the best bit? We don't charge a broker fee!⁣
⁣
Tap the link in our bio to learn more.⁣
⁣
...⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.

We offer appointments outside normal working hours!⁣

So if you need mortgage advice in the evenings once the kids have gone to bed or at the weekend when you`re not busy with work - we are available for you. ⁣

And the best bit? We don`t charge a broker fee!⁣

Tap the link in our bio to learn more.⁣

...⁣

Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.
...

3 0
Buying a house? Here's what you need to know about lender's valuations:⁣
⁣
A lender's valuation helps the mortgage company decide if the house you want to buy is worth enough to secure your loan.⁣
⁣
Exactly what's included varies, but they typically examine the property's type, condition, and sales data of similar properties in the area.⁣
⁣
But, it's important to keep in mind that a lender's valuation isn't a full survey. ⁣
⁣
It can't tell you everything that might be wrong with the house, like whether it has any costly issues that need addressing with the gas or electrics. So, it's usually a good idea to get your own survey done by a reputable surveyor.⁣
⁣
Buying your first home and taking out a mortgage can be overwhelming at times, but we're here to help. Hit follow for more tips or arrange a chat with one of our advisors on 0800 612 5596.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣
⁣
...⁣
⁣
#firsttimebuyeruk #firstimehomebuyers #propertyladder #firsttimehomeowners #firsttimebuyertips

Buying a house? Here`s what you need to know about lender`s valuations:⁣

A lender`s valuation helps the mortgage company decide if the house you want to buy is worth enough to secure your loan.⁣

Exactly what`s included varies, but they typically examine the property`s type, condition, and sales data of similar properties in the area.⁣

But, it`s important to keep in mind that a lender`s valuation isn`t a full survey. ⁣

It can`t tell you everything that might be wrong with the house, like whether it has any costly issues that need addressing with the gas or electrics. So, it`s usually a good idea to get your own survey done by a reputable surveyor.⁣

Buying your first home and taking out a mortgage can be overwhelming at times, but we`re here to help. Hit follow for more tips or arrange a chat with one of our advisors on 0800 612 5596.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.⁣

...⁣

#firsttimebuyeruk #firstimehomebuyers #propertyladder #firsttimehomeowners #firsttimebuyertips
...

1 0
"...There was nothing hidden or any personal gain for the company, just genuinely making sure we got the best we could get under our circumstances. We will be definitely using them again when it comes to the time to remortgage."⁣
⁣
Don't let credit issues hold you back from owning your own home. We have access to a comprehensive panel of lenders, so we may be able to connect you with lenders who are more sympathetic to your situation.⁣
⁣
Visit our website to learn more (🔗 in bio) or give us a call on 0800 612 5596.⁣
⁣
...⁣
⁣
⁣
Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.

"...There was nothing hidden or any personal gain for the company, just genuinely making sure we got the best we could get under our circumstances. We will be definitely using them again when it comes to the time to remortgage."⁣

Don`t let credit issues hold you back from owning your own home. We have access to a comprehensive panel of lenders, so we may be able to connect you with lenders who are more sympathetic to your situation.⁣

Visit our website to learn more (🔗 in bio) or give us a call on 0800 612 5596.⁣

...⁣


Your property may be repossessed if you do not keep up repayments on your mortgage. Yes Mortgage Services Limited do not charge a broker fee.
...

1 0