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AAP Financial Solutions Ltd
2b Stanhope Gate,
01276 423360 07973 421446
Finance Made Easy!
01276 423360 / 07973 421446
Mortgage types explained
Discount Interest Rate Mortgage
A variable rate, of interest, but set at a set percentage amount below the lender’s standard variable rate, usually for a short period of time. At the end of the initial period, the mortgage reverts to the lender’s variable mortgage interest rate. There are often charges if you wish to pay back (redeem) your loan before the end of the discounted rate period. In some cases these charges also apply for a short period thereafter.
The main factor influencing the interest rate on variable interest rate mortgages is the base rate set by the Bank of England. There is, however, no guarantee that a change in the Bank base rate will necessarily mean a change in mortgage rates. A tracker interest mortgage rate is set at a certain percentage above or below Bank base rate, and this percentage difference is fixed – so if the base rate drops by 0.25%, your Tracker Mortgage rate drops by 0.25% too and vice versa.
Fixed Interest Rate Mortgage
Set at a fixed rate usually an amount below the lender’s standard variable rate, usually for a short period of time. At the end of the set period, the mortgage reverts to the lender’s variable interest rate. There are often charges if you wish to pay back (redeem) your loan before the end of the initial incentive period In some cases these charges also apply for a short period thereafter.
Capped Interest Rate Mortgage
These rates limit your payments to fluctuations between a maximum and minimum interest rate for a set period of time. These rates may only be available at certain times depending on mortgage market fluctuations and may also incur a charge if you wish to pay back (redeem) your loan before the end of the capped/collar rate period.
Offset of Current Account Mortgages
This is a fully flexible mortgage, which allows you to keep balances (such as the mortgage, savings, and current account) in separate accounts, but, for the purpose of interest calculation, all balances are aggregated. Credit in savings and current account are offset against the mortgage, with interest only being charged on the reduced balance. This type of mortgage gives you total flexibility to access your savings, whilst making significant long term savings on interest charges. Interest is not paid on savings accounts linked to offset mortgages.
AAP Financial Solutions Limited is an appointed representative of The Right Mortgage Limited, which is authorised and regulated by the Financial Conduct Authority.
Registered Office: 2b Stanhope Gate, Stanhope Road, Camberley, Surrey, GU15 3DW. Registered in England and Wales no. 07768246.
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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There may be a fee for mortgage advice. The precise amount will depend on your circumstances but we estimate it will be £395.