Mortgages Flashcards
What are the 4 types of variable rate mortgages?
Standard variable rate mortgages
Tracker mortgages (where the IR tracks the BoE rate or SONIA)
Discounted mortgages (at the end of the discounted term, the IR goes back to the SVR)
Capped rate mortgages (variable rate mortgages with an upper limit on the rate charged, allows the borrower to benefit from low IR)
Two types of flexible mortgage products
Offset Mortgages - Where the client has their current, savings and mortgage account all with one provider. The positive balances offsetting the negative mortgage balances.
Current A/C Mortgages - Similar but only one current A/C is used. The borrowers salary and savings go into the current A/C and the lender debits the mortgage payments from the A/C.
Key features of a Mortgage Payment Protection Insurance (MPPI)?
Provides protection if the borrower is unable to keep up with mortgage payments
Pays out after a maximum of 60 days off work
Borrower must have been working a minimum of 16 hours pw for the prior 6 months
Pays a fixed amount for a certain period or until they return to work
Providers cannot sell MPPI at the same time as the loan due to previous mis-selling
