Cambridge Building Society: The Basic Mortgage Options

By Author: Elizabeth Smythe
Total Articles: 2
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Unless you're a financial advisor or have spent some time working for the banking sector, chances are mortgages will be somewhat alien to you. The idea of having to learn the difference between fixed, variable and tracker can seem like a hugely daunting one - especially given the huge sums of money that it will concern.
So before setting up any sort of building society mortgage, it's worth doing a little digging to find out the options and which one would work best for you.
Fixed-rate
Just as the name suggests, fixed-rate mortgages will not see fluctuations, regardless of what the bank of England base rate does. If during the course of the mortgage repayments the base rate was to fall, your payments would not; however if they were to rise, you would remain paying what you had all along.
A mortgage such as this offers stability to the home-owner, enabling them to pay the same amount every month, which helps with day-to-day budgeting.
Variable-rate
Understandably, variable-rate mortgages will indeed change ...
... with the Bank of England base rate. This means that payments could go up or down on an annual basis during the term of the mortgage. What it does allow for however, is the home-owner to get some flexible benefits; such as the ability to overpay or take payment holiday without incurring any charges or penalties.
Likewise, there are also discounted variable rate mortgages, but these may not offer the same freedom when it comes to benefits such as payment holidays.
Tracker
Relatively newer than the others, tracker mortgages follow the Bank of England base rate more strictly, with fluctuations taken into account each and every month of the mortgage's length. These have more in common with variable mortgages than they do fixed-rate, but allow for a slight variation on the theme.
Mortgages are extremely confusing. They are also not the kind of thing with which you want to gamble, so it's worth checking out the facts, figures and options before making any firm decisions. Plus, if you have any questions, you could always pop into a branch of your business society and speak to the experts there who will surely put you right.