Trying to buy your own home is not only a difficult and stressful time, but one of the biggest financial commitments you are likely to make in your lifetime.

While it’s scary, it needn’t be difficult; you need to find the best mortgage which suits your current and likely future financial situation.

So here at utterONE we let you compare deals online from utterly every UK mortgage provider, all with an added bonus of cashback....

With so many different products/lenders and mortgage types to understand, where do you start?

UtterONE have created this guide which makes understanding mortgages easy for anyone.


Mortgage Types

The most common terms you will find are:


Buy To Let Mortgage

A mortgage designed specifically for the purpose of you buying a property to let (rent) out.


Fixed Rate Mortgage

A fixed rate mortgage is where the interest is fixed for a set period. The rate payable will not change during that period regardless of changes in the lender's standard variable rate.


Stepped Rate Mortgage

A stepped rate mortgage offers new home buyers a range of choices, where the percentage discount changes at one or more points during the deal period.

Stepped rate mortgages with cashback: With this mortgage type, the lender would couple a lower interest rate with a cash back bonus of typically 0.5% or 1% of the total mortgage amount, which can then be used as you see fit. This is very useful for first-time buyers with furniture expenses, building work to complete or Stamp Duty to pay.


Discount Rate Mortgage

Discount rate mortgages are an attractive proposition for new customers and lenders. For a fixed term you are offered a fixed discount (expressed as a percentage) off the lenders standard variable rate.


Interest Only Mortgage

With an interest only mortgage borrowers are only paying off the interest over a pre-agreed set period over which time the only payments you will make will be to clear the interest accrued on the loan amount.


Self-Build Mortgage

A self-build mortgage is exactly what it says, a loan you take out to finance building your own house. The money is released in instalments, usually with an initial payment to buy the land. With the remainder of the payments made during different stages of the build, upon completion of certain criteria.


Lifetime Mortgage

Lifetime Mortgages (sometimes called Roll up Mortgages) alongside Drawdown Mortgages (both come under the umbrella term of Lifetime Mortgages) are the most popular form of Equity Release. A lifetime mortgage is a long term loan secured against your home which is repaid when you die or go into long term care.  In a snapshot the lender offers a cash lump sum, a monthly income or a combination of the two which is based on the value of the property.


Offset Mortgage

If you own a home and have some savings, then an offset mortgage could make your savings work for you – and save you a lot of money. An offset mortgage ‘offsets’ the money in your saving and current accounts and is used to reduce your monthly repayments (by reducing the amount of interest you pay) or the term of your mortgage. For example if you have a £100,000 mortgage and have £5000 in savings, you will only be charged interest on £95,000 of your mortgage.


Mortgage Features

As well as different costs, mortgages can have different features. Choosing the right feature helps to make sure you find the right mortgage for you.

The most common mortgage features are:


Tracker (rate)

A tracker mortgage is linked to the Bank of England interest rate so your mortgage will be guaranteed to move in line with the rate. The best tracker mortgage will depend on your specific requirements.


Remortgage

Remortgaging a property is usually considered for a number of reasons often to release equity, consolidating debt, securing a better interest rate or switching products to save money.


First-time Buyer

First-time buyers can often have a hard time getting on the property ladder. Therefore first-time buyer mortgages are designed specifically for those taking their daunting first step onto the property ladder and takes into account individual specific circumstances


Low Deposit

Low deposit mortgages are making a comeback; a low deposit mortgage is one where the loan-to-value (LTV) is 90% or greater.


Existing Customer

As an existing a customer of a mortgage lender you may wish to re-mortgage with them if, for example, your mortgage deal is ending or simply that you’d like to borrow more money.


Other Useful Terms

APR

APR stands for 'Annual Percentage Rate' and is the cost associated with borrowing money in the form of mortgages, loans, or credit cards etc.

The APR calculation takes into account -

  • The interest rate
  • When it's charged (daily, weekly, monthly or yearly)
  • Initial fees (a bank will often charge a fee when a finance deal is signed)
  • Any other costs applicable to the loan

All lenders have to calculate APR the same way which is good news as it enables you to make a direct cost comparison between different lending products.

utterONE enables you to compare APR from different lenders on like for like products.


Poor Credit (sometimes referred to as Adverse Credit)

Customers who may have poor credit history i.e. who have been declined for credit in the past, declared bankruptcy or who are struggling to service their existing debt.

Affiliate link to credit report/score


County Court Judgments (CCJs)

A CCJ is a legal decision handed down by a county court in the UK when a creditor sues the debtor for money that is owed to them, usually under a credit agreement. This basically means if you have a CCJ registered against you on your credit file it will become very difficult for you to obtain credit, finance or a mortgage in the future.


Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a very good way of dealing with a debt problem and for an individual to avoid bankruptcy. The IVA forms as part of a contractual arrangement with creditors via an Insolvency Practitioner.


Lender

A lender is an, individual, or company who offers to lend you money. In this case it maybe a commercial lender such as a bank or building society offering you a loan, mortgage, credit card.  The type of loan you take may vary in terms of interest, type, how you repay it, the commonality in all of these cases is the goal of the maximizing the profit for the lender if the borrower defaults on the payments.


Standard Monthly Repayment

A standard monthly payment is the pre-agreed amount you the lender has agreed to pay back, which is usually a set percentage of the amount borrowed whereby both the capital and the interest are repaid.


Interest Only Mortgage with a ISA Investment Plan

An interest only mortgage where an ISA investment plan has been put in place as a means of paying back the capital owed at the end of the mortgage term.

An agreement will be made by the lender and the borrower for the borrower to put an agreed sum of money into an ISA. Adjustments may be made depending on the market.


Interest Only Mortgage with Endowment Savings Plan

An interest only mortgage where an endowment savings plan has been put in place as a means of paying back the capital owed at the end of the mortgage term.


Interest Only Mortgage with a Pension Plan

An interest only mortgage where a pension plan has been put in place as a means of paying back the capital owed at the end of the mortgage term.


Mortgage Term

Mortgage term represent the number of years over which you agree to pay back your mortgage; this can be up to 40 years which is the maximum term.


Early Redemption Charge

An early redemption charge is a fee you face if you decide to pay off all or part of your mortgage earlier than your agreed terms.


Right to Buy Scheme

The right to buy scheme is a government initiative which enables local authority tenants to buy their property from the local council.


Confidence Score

All lenders on the utterONE site have a confidence score, which is aimed at helping you make your decision with utter confidence.

The confidence score is generated with a common sense algorithm of how utterONE users interact with the products on utterONE; and therefore represents a good indication of the popularity of a product with our users.


Merchant

A merchant on utterONE represents mortgage brokers such as London Mortgage Advice who employ qualified mortgage brokers to give you advice.


Mortgage Brokers

Simply put, the mortgage brokers are trained, regulated by the FSA and qualified to offer you appropriate advice.  

The Mortgage brokers who offer advice on utterONE are defined by the type of advice they offer you.

The advice available is:

  • Whole Market
    • Whole market advice is Offered by an independent mortgage broker who offers advice on the whole market and isn’t limited to one supplier or service.

  • Restricted
    • o Restricted advice is available from a multi-tied mortgage broker who offers advice on a limited number of alternatives.

  • Single Provider
    • Single provider advice is available from a tied-mortgage broker who is limited to one supplier and can only offer advice for one product.

UtterONE recommend you always select a broker that offers whole market advice.


FSA

The FSA (Financial Services Authority) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000 to regulate the financial services industry in the UK.