When it comes to buying a property you’ll be faced with a lot of options for choice. From where to live to what type of property to buy, you’ll have a lot of different things to weigh up.
One of the most important is the type of mortgage you take out. The best mortgage for you will depend on your circumstances, future plans and the type of property you’re buying.
A mortgage is a long-term agreement so it’s important to take time to think about what you want and how much you’ll be able to afford. If you’re unable to meet repayments your home may be repossessed so you’ll want to know the ins and outs of all the different types of mortgages.
Here's a quick guide to some of the different types of mortgages so you can find one that suits you.
Fixed rate mortgages
If interest rates do go up, a fixed rate will mean just that – your rate will stay the same for as long as it’s fixed. This is also the case if interest rates go down.
Standard variable rate (SVR) mortgages
The SVR is commonly the long term rate of interest which is charged once the introductory period, fixed or term tracker period ends. Some lenders may also let you take out a mortgage on their SVR. Your lender decides the rate and may decide to increase or decrease it over the period of your mortgage.
Currently customers can’t apply for a SVR mortgage with HSBC.
With interest-only mortgages you only pay the interest first, so the amount you owe doesn’t reduce. These mortgages may be hard to find as you'll need to demonstrate to the lender that you’ll have some way of paying off the debt in the future (such as an investment elsewhere).
Tracker mortgages follow the Bank of England’s Base Rate and rise or fall along with it. There are ‘lifetime’ trackers for the life of the mortgage, and term trackers which may be for two or three years.
HSBC currently offers term trackers.
Buy to let mortgages
If you’re buying a property to rent out you will need a buy to let mortgage. You may need to gather plenty of information to do with tax, letting fees, insurance and other costs before going ahead.
Do some research, use online calculators and speak to people about their experiences. If you would like advice as to which mortgage may be suitable for you, make an appointment to see a mortgage specialist.
They will review your financial situation and will provide suggestions and recommendations as to which mortgage product is most suitable for you based on the information you provide.
Think carefully before securing other debts against your property. Your property may be repossessed if you do not keep up repayments on your mortgage.
HSBC Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 114216). HSBC Bank plc is a company incorporated under the laws of England and Wales with company registration number 14259 and its registered office at 8 Canada Square, London E14 5HQ. HSBC Bank plc’s registered VAT Number is GB 365684514.