Teachers Finance - Mortages

What is a mortgage?

A mortgage is like any other kind of loan – you borrow money, and you pay it back with interest over a period of time. But a mortgage has one key difference: it’s secured against your home. So if for any reason you can’t repay it, the lender can sell your home to recover their money.

Repayment Mortgage

repayments on these loans represent both interest and a portion of the capital owed each month. This means that your outstanding mortgage balance will reduce year on year over the term of the loan. So if you make the correct payments on time at the end of the term your mortgage will be repaid.

Interest Only Mortgage

You only repay the interest on the loan for the duration of its term. You then repay the full loan amount at the end of the mortgage period in one lump sum.

How long does a mortgage last?

There is no right length (term) to a mortgage. The standard term is around 25 years, and most of us tend to have a mortgage throughout our working lifetime. With the large sums involved, this spreads the cost and makes your monthly payments more manageable. However, you can choose a different term if it suits you and the lender agrees that you can afford it. If you can afford a shorter term you may have higher monthly payments but pay less in total. With a longer term, you may pay less each month,but more in total.

Interest Rate

Fixed Rate Mortgage

A fixed rate means that no matter what happens to interest rates, your mortgage interest rate stays the same until an agreed date. However you should note that your monthly commitment could change as a result of other factors; for example changes in insurance premiums.When the fixed rate ends, your mortgage will change to a different interest rate. This will usually be either our Standard Variable Rate, or a rate which is linked to the Bank of England Base Rate. The follow on interest rate may be higher or lower than the interest rate you've been paying. If the interest rate is higher, your payments will increase. However, we will contact you in time to re-mortgage so you may not need to go to the lenders variable rate

Capped Rate Mortgage

A capped rate mortgage sets a maximum rate of interest that the lender can charge, but only for a specified period. So you could still keep to a maximum budget on a capped rate.

Tracker Mortgage

A Tracker mortgage is a variable rate mortgage where the interest rate is linked directly to the Bank of England Base Rate. So whenever the Bank of England Base Rate changes, the rate on the tracker mortgage are guaranteed to change by the same amount, within an agreed period.

Discounted Rate Mortgage

This interest rate is discounted from the Lender’s published Standard Variable Rate, for an agreed period from the start of the mortgage.

Standard Variable Rate (SVR)

This is the standard variable mortgage interest ratethat is offered by lenders. It is usually the rate that accounts revert to after a fixed, capped or discount product ends.

Offset Mortgage

An offset mortgage can also be referred to as a savings account mortgage - because the balance of your savings account when positive is offset against the outstanding balance of your mortgage. This means that you do not accrue interest on the balance of your savings account but do not pay interest on the same amount of your mortgage at a set rate. In this way an offset mortgage can help you make a saving on your home loan. The benefits of a flexible offset mortgage are that it could reduce the amount of interest payable on your outstanding mortgage. This means you will pay less over the life of the mortgage meaning either lower monthly mortgage payments or a shorter mortgage term. Offset mortgages are available on tracker rates and fixed rates.

How much will mortgage advice cost me?

Because we are independent, we give you the choice of how we are paid for our mortgage advice.
Either:
* No fee, we will be paid by commission from the lender.
* A fee of up to 1% of the mortgage amount, this is payable when you apply for a mortgage. We will then refund any commission Spotlight receive from the lender
* In a small number of cases a fee of £245 would be payable when you apply for a mortgage. We will also be paid commission from the lender. If this were the case we would let you know before we started any chargeable work.