Choosing a mortgage

Tracker mortgage? Fixed rate mortgage? Advice can really help you to choose the right mortgage. If the whole process seems a bit tricky, it may help to know there are really just a few steps to follow:

• Do you need help or advice?
• How do you want to repay what you've borrowed?
• How quickly do you want to repay your mortgage?
• What type of mortgage will suit you?

1. Do you need help or advice?

Most mortgage lenders offer two levels of service: arranging your mortgage with advice or without advice.

With advice

• This means you have a right to expect the adviser to only recommend mortgages that are suitable for you, based on the information you have given them. They will help you to choose between products, for example help you to understand the difference between a tracker mortgage and a fixed rate mortgage. Advice should be clear and easy to understand.
• Only Financial Services Authority (FSA) authorised firms and their agents are allowed to give advice on mortgages. They must follow FSA rules when advising you.
• There is a system to resolve any complaints you may have and put things right.
• Read the Key Facts Illustration headed 'About this mortgage' and make sure you fully understand the mortgage you are being offered.

Without advice

• Remember, getting advice on your mortgage is your call. Don't feel pressured.
• Of course, if you decide not to get advice, you'll have less cause for complaint if the mortgage turns out to be unsuitable!
• Do your homework. Take all the time you need to read up on the latest mortgage products. The better your knowledge, the stronger your confidence.
• Always be sure to check whether your mortgage lender is authorised by the Financial Services Authority (FSA).
• Read the Key Facts Illustration and make doubly sure you understand the mortgage you are being offered.

Back to top

2. How do you want to repay what you've borrowed?

Choose between an interest only and repayment mortgage

Repayment vs. Interest-only  

Repayment

Your monthly payments are made up of both interest and capital, so your mortgage is gradually paid off over the mortgage term.

Interest-only

You only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't usually reduce. At the same time, you put money into a separate investment, such as an ISA, which should grow and pay off the mortgage as scheduled. You must make sure you keep premiums up to date on any mortgage investment product.

Your Mortgage Adviser can provide you with more information about the options available but cannot give you advice on the most appropriate investments for you.

Back to top

Part and Part

Is where you combine a repayment with an interest-only mortgage. So part of your mortgage would be repayment, and the remaining part would be interest-only.

3. How quickly do you want to repay your mortgage?

25 years is the standard term to repay most mortgages, but you may have the option to spread it over a maximum of 40 years. This could help with budgeting early on and you could then reduce the term in the future.

Back to top

4. What type of mortgage will suit you?

Now it's time to take a look at different types of mortgage products.

Fixed rate

Your interest rate will be fixed for a specified period of time by the mortgage lender and will not change until a set date.

Tracker rate

A variable rate mortgage where the interest rate is directly linked to another interest rate not set by the lender (such as the Bank of England base rate) and will be the same as or a percentage above or below the tracked rate until a set date.

Discounted rate

A variable rate mortgage that's discounted by a certain percentage until a set date.

Flexible

This mortgage allows you to take control of your monthly payments and benefit from being able to make overpayments, underpayments or take payment breaks and pay off your mortgage when you wish, if you have the funds available.

Capped rate

A variable rate mortgage where the interest rate will not go above an agreed level, known as "the cap", until a set date. Capped rates can be linked to the lender's standard variable rate or a tracker rate.

Standard variable rate

This is a rate set by a lender. It will often be the interest rate the lender will charge when the period of one of the other types of rate listed here has come to an end.

Take a look at the choices available from Halifax.

5. What additional features are important to you?

While choosing a great rate is important, having a little flexibility can make a huge difference when it comes to managing your mortgage.

Will your mortgage let you...

• Overpay?
• Underpay?
• Take a payment holiday?
• Change your repayment term?
• Add any fees to your mortgage?
• Have your interest worked out daily?

At Halifax, all these special features come as standard - regardless of the mortgage you choose. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

Back to top