Mortgages A-Z
Mortgage terms explained
Offset Mortgages
These are mortgages that allow you to use any savings you have to reduce your mortgage balance, so reducing interest charges and repaying your mortgage more quickly. The benefit is that your savings are still available if you need them. Rather than using them to permanently pay off part of your mortgage, it's more of a temporary payment that you can reverse later, while benefiting from lower interest in the meantime.
An example of this kind of mortgage is the RBS One Account which combines your mortgage, savings, current account, loans, and credit cards all in one account with complete flexibility.
Remortgage
A remortgage is simply the process of moving your mortgage from one lender to another, usually to benefit from a lower interest rate or other offer. It is usually easier to get a remortgage than a first mortgage, as you are more likely to have equity in your home, plus a history of keeping to your mortgage payments.
Repayment Mortgage
This is a traditional kind of mortgage, where part of your repayment pays off interest and part of it pays off the original amount borrowed. These mortgages will always be cleared by the end of the repayment term.
Right to Buy
These are mortgages aimed at council tenants who wish to buy their home under the Right to Buy legislation introduced by the Thatcher government.
Tracker Mortgage
A tracker mortgage is one that follows the movements of the Bank of England Base Rate. It will normally have an interest rate slightly higher than the base rate, but one that changes in step.
Variable Rate
This is the standard, typical mortgage type we all know and love, which has interest rates that can change up or down in response to base rate changes. Unlike a tracker mortgage, the lender does not have to pass on the full amount of any changes, but is free to change its rate by more or less according to market conditions.
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