10. Mortgage Prodcuts Flashcards
Standard variable rate
Rate varies over time
Set by the lender
Based on: competition & BOE rate
Discounted mortgage
Set lower than the SVR for a period of time
Come with a fee
ERC may be payable
Cash back mortgages
Incentive from lender
Percentage of amount borrowed as cashback
Tracker mortgages
Track the BOE base rate
Capped or Collard rate mortgages
Capped rate - won’t rise above a certain percentage rate for a fixed period
Collard rate - won’t fall below a certain percentage rate for a fixed period
Flexible mortgages
Flexible payments such as: overpay, underpay, lump sum, temporarily stop
Arrangement fees and ERC are common
Offset mortgages
Customer had mortgage account, savings account and current account with one provider
Any positive balances in the savings or current account used to offset mortgage account
Current account mortgages
Similar to offset but only use current account
Any excess salary/savings are used to offset mortgage which reduces capital
Deferred interest mortgages
Lender allows borrower to delay making interest payments for a period of time
Capital owed actually increases
Hybrid arrangement mortgages
Part capital and repayment part interest only
When the repayment vehicle for interest only is less than the loan
Product transfer
Borrower switches from existing mortgage product to another with same lender
What is an APR
APR is the interest on the loan calculated by standard formula made by government
Calculated with reference to a TCC
What is an APRC
Annual percentage rate of charge is used for mortgages and second charges
Amount of interest applied to a mortgage on an annual basis
How does an ISA mortgage work
borrower just pays interest only and also pays into an ISA.
at the end of term the ISA pays off capital
