Mortgages

Mortgages

Are you paying too much on your existing mortgage? Would you like to save money? We at PACE will try to find the right deal for you, that could enable you to reduce your monthly mortgage payments.  Being independent means that we can search the whole of the mortgage market to find the best deal for you according to your personal circumstances.

It is helpful to consider your mortgage from two aspects; the amount that you borrow (known as the capital), and the amount of interest charged (the interest), which is usually paid monthly.  There are two basic types of mortgage, these are:

• Capital & Interest Repayment Mortgage - As well as interest payments being made, the mortgage loan amount is progressively paid off throughout the term of the mortgage.  At the end of the term, as long as all monthly premium payments have been made, nothing remains owing to the lender.
• Interest Only Mortgage - The only payments that are made throughout the term of the loan are the interest payments.  The original loan amount remains payable to the lender at the end of the term.

Your home may be repossessed if you do not keep up repayments on your mortgage

Interest Rate

This is the rate at which interest will be charged based on the amount you borrow.  It is essential that the interest rate package suits your financial needs now and that we also consider the long-term affordability of the mortgage.  The basic types of interest rate packages are:

• Fixed - The rate is guaranteed to stay fixed for a specified period of time, after which it will usually revert to the lender's standard variable rate, which may lead to an increase in the monthly payments, or an option is sometimes available to transfer to a new fixed rate. Borrowers on fixed rates will not benefit from any general reduction in interest rates during the fixed rate period. Early repayment charges will usually apply if the borrower wishes to repay the mortgage during the fixed rate period.
• Standard Variable Rate - The traditional type of mortgage interest rate.  It is set by the lender and fluctuates from time to time. It is not linked to the Bank of England base rate (Base Rate) and the lender is under no obligation to pass on reductions in Base Rate to the borrower. However, movements in interest rates may influence the lender's decision regarding the level of the rate, and an increase in the rate will mean that the borrower's monthly mortgage payment will increase.
• Discounted Rate - A discount to the lender's standard variable base rate, lasting for a guaranteed time period.  It can vary in that period with any changes in the standard variable rate, and at the end of the discounted time period it will revert back to the standard variable rate. Increase in the interest rate during the discounted period along with the move to standard variable rate at the end if the discount period will lead to an increase in the monthly mortgage payment. Early repayment charges will usually apply if the borrower wishes to repay the mortgage during the discount period
• Capped Rate - A form of variable rate, the rate is capped at a specified level over a specified time period.  It can rise as well as fall during the capped rate period, although will not exceed a specified limit. Increases in the interest rate during the capped period are subject to to the upper limit and the move to a standard variable rate at the end of the capped period may lead to an increase in the monthly mortgage repayment. Early repayment charges will usually apply if the borrower wishes to repay the mortgage during the capped period.
• Tracker - A mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it.

Repayment Methods

Choosing a Capital Repayment mortgage means that you will usually pay the mortgage back directly through your monthly premiums.  Choosing to pay the Interest only will mean that it is your responsibility to ensure that the capital is repaid at the end of the mortgage term. You may wish to consider using an investment based repayment vehicle to repay the capital at the end of the term. Such repayment vehicles may include:

• Endowment - A form of life assurance policy with a savings element. New endowments have become less popular due to the loss of certain tax relief such as MIRAS and life Insurance Premium Relief (LAPR) and also due to reduction in investment returns has lead to concerns that some policies may leave borrowers with a shortfall at the end of the mortgage term.
• ISA (Individual Savings Account) - A tax efficient savings vehicle which can hold pooled investments such as unit trusts, which invest in the stock market and may also hold a cash element subject to specified annual contribution limits.
• Pension - The pension contributions will obtain tax relief subject to the annual and lifetime contribution limits.  At the end of the mortgage term the aim is for the capital will be repaid from the tax-free sum that can be taken from a pension fund at its maturity. Any amount taken from the tax-free lump sum to repay a mortgage will reduce the total amount of pension available to generate an income in retirement and may therefore reduce the borrower's potential pension benefits.

What will you have to pay us for this service?

There will be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £299. You have the option to pay us a fee and receive any commission which we are paid by the lender. If you choose this option, we estimate that the fee will be £999.

Your home may be repossessed if you do not keep up repayments on your mortgage

Further Help

If you require further help with your mortgage or loan enquiry then please don't hesitate to contact us on the form below.