I wish I had the straight up knowledge and skills to tell people about every mortgage and which is likely to work best with them but I simply don’t which is why I use these two sites as a reference

The basic idea is that instead of having a separate savings account you actually link it to your mortgage account and the money is used to reduce the balance of your mortgage. Obviously because the interest rate on your mortage is usually higher than the rate you gain from your savings then this can work out very beneficial. For example if you had a savings account which gave you 3% interest then you could potentially earn upto say £30 but if your mortgage rate was 6% interest then you could knock off £60 and therefore making more of your money.

Unlike a fixed rate, you will not have a set rate you will be paying each month so budgeting can be a little trickier. A variable rate can go up or down each month because it is linked to the Bank of England base rate (BOEBR), so if this rate decreases you would pay less on your mortgage while someone on a fixed rate continues to pay the same amount, however this can go both ways and if it went up you could end up paying more.

Unfortunately a variable rate mortgage isn’t based purely on the BOEBR, the rate is usually set between 1-2% higher and as such can make this a very expensive choice for mortgage payments. Usually this is the plan you’re put on after your introductor offer has expired which is why it can pay to shop around.

What is a fixed rate mortgage? 

A fixed mortgage is literally as simple as the name suggests, it has a fixed interest rate and runs for a fixed amount of time for example 2, 3 or 5 years. This means that your monthly mortgage payments will be the exact same amount each month until the mortgage expires.

If you like to keep a close eye on your monthly outgoings then this is the perfect solution, you can prepare and manage your money knowing the exact amount you will be spending each month.

So you may be thinking that a mortgage at a fixed rate is the perfect solution, unfortunately that is arguable. Anyone who watches the news or picks up a newspaper will know that mortgage rates can go down just as quickly as they go up, this means that you could end up continuing to pay your fixed rate while others on a variable rate are paying less because their mortgage rate has lowered.

I will talk in more detail about variable rate mortgages in my next post

-Peter Patching

I’m new to this ‘blogging’ business but figured what better way to get into it than to talk about something I have recently had a lot of experience in.. mortgages!

Just like many others out there I was working a well paid job which let me cover the cost of my mortgage and still enjoy the pleasures of life but unfortunately after loosing my job I found myself in a tricky position.. how was I going to continue to pay my mortgage?

Choosing a mortgage is hard enough to start with since there’s such a wide range of options such as:

• Fixed rate
• Buy to let
• Offset
• Discount & Tracker
• Capped

Choosing the right mortgage in the first place can help in the long run since some may end up eating up your whole wage packet each month whilst others such as interest only allow you to save money to one side and pay the mortgage at the end of the term which is ideal if you’re short on money at some point. Obviously you have to manage your money very carefully whichever option you choose since we all know that your home could actually be repossessed if you fail to keep up payments.

Hopefully all the people out there in the same position as myself will find my future posts to be helpful.

-Peter Patching