Mortgages In The United Kingdom

Below is an overview of the mortgage options available to finance your United Kingdom property purchase.

A well developed mortgage system awaits investors in the UK; however, tighter lending conditions are today making it more difficult for some borrowers to secure the loans they hope for.

Variable rate mortgages

The interest rate you pay can vary over time. Every mortgage lender has a Standard Variable Rate (SVR) that is loosely based on rate established by the Bank of England (Bank Rate). Each lender’s SVR is usually 1% – 2% above the Bank Rate.

Fixed rate mortgages

These are very popular in the UK. As the name suggests, they allow you to fix the rate of interest you will pay on your mortgage for an agreed period. Most UK mortgage lenders offer a range of fixed rate mortgages. The most popular fixed rate mortgages are 2 year, 3 year and 5 year deals, but it’s possible to get a fixed rate mortgage for anything from 6 months to 25 years.

As a general rule, the longer the period of your fixed rate, the higher the interest rate you can expect to pay. However, as this market is so competitive, 2, 3 and 5 year deals are sometimes available at very similar interest rates, so it pays to shop around.

Capped rate mortgages

A mortgage similar to a fixed rate mortgage, in that there is a maximum interest rate set for a given period of time, and the rate you pay is guaranteed not to go above that rate for the agreed period. However, with a capped rate mortgage, should the Bank Rate fall during that period, the rate you pay for your mortgage will 'track' the interest rate downwards, reducing your mortgage repayments.

Tracker mortgages

These are similar to discount rate mortgages, but are arguably more transparent. With a discount mortgage, the lender offers you a set percentage from its own Standard Variable Rate (SVR). A tracker mortgage follows the Bank Rate set by the Bank of England charged at a defined margin, eg. if the Bank of England sets the Bank Rate at 5%, you might get a tracker mortgage at Bank Rate 1% = 6%.

Buy-to-Let Mortgages

Buying property to rent out privately is a hugely popular form of property investment in the UK. Buy-to-let mortgages can make sound investments, but research is important as you will need to ascertain what buy-to-let mortgage types are available and what kind of renters to look for.

Share-to-Buy Mortgages

Due to today’s rocketing prices, many investors, particularly young couples, are struggling to take their first step onto the property ladder. Many mortgage lenders are therefore offering special packages, such as the “Share-to-Buy” mortgage, allowing up to four parties (normally a group of friends or family) to enter into a joint mortgage with reduced costs and this method is becoming increasingly popular in the UK as a whole.


Remortgage simply means switching your mortgage deal and/or mortgage lender. Remortgages are very popular, and with good reason: Whether you are switching your deal for a better remortgage rate, more suitable conditions, better service or increasing the size of your home loan, there are plenty of deals for remortgages available.

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Equity Release

Thousands of people are asset rich but cash poor, particularly in today’s economic situation. If you have a substantial amount of money tied up in your main asset, you could always release it by selling up and buying a smaller home; however, many older people would rather not sell the family home. If you have property in your own country and would like to borrow against this in an equity release plan, we can introduce you to independent financial advisors who can help you raise the necessary finance.

Increasing numbers of older/retired people are turning to equity release mortgages to allow them to free up some of the value in their properties.


The fees associated with taking out and paying off a mortgage have more than tripled in the last decade and you will need to watch out for the hidden charges behind the cheap headline rates. In the past, lenders charged a fee to cover administration costs, but today, many lenders rely on increased fees to bring in extra revenue.


Many off-plan developments offer installment plans over between 12 to 60 months. The charges applicable vary according to the developers and repayments are usually indexed.

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When considering a buying property in United Kingdom, you are well advised to get expert mortgage advice from a mortgage broker.

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