Interest Rate Information

Fees

In addition to interest you’ll also be charged fees for setting up the mortgage and annual management fees. These will vary from product to product and lender to lender. As a general guide, a straightforward variable interest rate mortgage will usually carry lower fees than a more complex managed rate mortgage.

Term

The term of the loan is important as it will effect how much interest is paid over the life of a mortgage. If the mortgage is repaid quickly, over say ten years, the rate of interest maybe higher on a monthly repayment basis, but the total cost may be less than if the mortgage were repaid over a twenty year period.

Security

The greater security you offer the better the deal you can get from a provider. They assess their risk and if they feel the risks are diminished by the security guarantees you provide they’ll lend more money at attractive rates of interest. Be careful however, what you use for security. If you offer the business as security you could lose it as well as the property you want to buy. One way to avoid this is to sell the property to another company who immediately leases them back to you.

Repayment

There are three main ways you can repay your mortgage:

Equal payments
You make a set number of repayments of equal size.

Equal payments with a final balloon payment
You make a set number of smaller payments and pay a final larger payment (the balloon) at the end of the term.

Interest-only payments
You pay only the interest on the loan until the final payment when you will need to repay the capital as well

Payment protection
You can insure the loan against unforeseen problems by paying an insurance premium that will repay the outstanding loan debt in the case of default caused by a set number of problems - illness and death for example. This cover will increase the cost of the loan but is useful if you are cautious and wish to ensure the loan is protected.