Mortgages A-Z
Mortgage terms explained
First Time Buyers
First time buyers are simply people buying a house for the first time. Rising property prices have made it harder than ever to take this first step, although there can be advantages - the lack of a 'chain' may mean you can get an offer accepted below the asking price if the seller is looking for a quick sale.
Fixed Rate
A mortgage in which the rate of interest charged is fixed at a certain figure for a certain period. Often, this will be a discount rate fixed for the first year or two, to tempt you into taking a mortgage out.
Fixed rates can be a good deal if the interest rate trend is upwards, as you will be protected from rate rises during the fixed rate period. On the other hand, you won't benefit from any rate cuts either.
Flexible Mortgages
Flexible mortgages allow some flexibility in your repayments. What form this takes depends on your individual mortgage, but you can expect to pay a little more if you want to reduce your mortgage quicker (overpayments), underpay if funds are a bit short, or take a repayment break altogether.
There will of course be limits to just how flexible you can be, but these kinds of mortgage can be attractive to people with unreliable or seasonal incomes.
Interest-Only Mortgages
These are mortgages where your repayments are solely used to repay the interest on your debt. While this means your repayments are much lower than with a repayment mortgage, you will still owe the full amount of your mortgage at the end of the term. It is expected that you will make other arrangements to pay off the debt by then, usually through investment (endowments being the most well known example).
Muslim Mortgages
Islamic law forbids the charging or payment of interest on financial transactions. This has meant that the vast majority of UK mortgages have been unsuitable for Muslims. However, more and more mainstream providers are now offering Sharia compliant packages, most operating on a leaseback principle that avoids interest charges.
Home - Mortgages
