Getting a mortgage: Features and benefits
Let us help you explore the differences between mortgage types and help you find a deal.
Mortgages for different circumstances
For most people getting a mortgage is a key step on the journey to becoming a homeowner but with so much choice available, it can be difficult to identify the right mortgage for your specific needs. With so many types of mortgages available, we've created this handy guide about the features and benefits you can expect to find.
Types of mortgage deals
Find out what types of mortgage exist in the market, what the main differences are and which is the best for your circumstances.
Fixed rate mortgages
With a fixed rate mortgage your interest rate and monthly mortgage repayments stay the same throughout the fixed rate period – with most mortgage providers, this is 2, 3 or 5 years.
If you prefer the stability of knowing how much you will pay for your mortgage each month then a fixed rate mortgage could be the best choice. However you should be aware that you would miss out on making savings if interest rates fall.
Offset mortgages combine your mortgage with your savings to reduce the interest charged on your mortgage. Instead of earning interest on your savings, you pay the difference between the amount in your savings and the amount of your mortgage. This can help to reduce your current payments, your future payments or the term of the mortgage.
A tracker mortgage, tracks (or follows) the Bank of England Base Rate over a set period of time. When the Base Rate rises, your interest rate rises – and when it drops, your interest rate also drops.
We apply ‘caps’ and ‘collars’ to tracker mortgages to ensure that any rate increases or decreases do not go over or under a certain interest rate.
Variable rate mortgages
Variable rate mortgages are mortgages where the interest rate is affected by a number of market conditions and can rise or fall depending on these. So, you may benefit from a drop in interest rates but could also end up paying more on your mortgage each month should interest rates rise.
Currently Yorkshire Building Society offer a range of Discounted Standard Variable Rate mortgages - these are mortgage deals where the interest rate is set at a specified level below our Standard Variable Rate.
Repayment (capital & interest) vs. interest only?
Repayment (capital and interest) mortgages
- Your monthly mortgage payment will include repayments of both mortgage interest and capital.
- Your mortgage loan will be repaid at the end of the term, provided all payments have been met.
Interest only mortgages
- Your mortgage payments count as repayment of the interest being charged on the mortgage loan only, and not the capital.
- Therefore the capital must to be repaid via other methods at the end of the term.
We do not currently offer Interest Only mortgages but we do have a guide page for existing customers who have one of these deals.
Mortgage deal incentives
Depending on the kind of deal you select, you might find that there is a cashback incentive attached, most commonly with First Time Buyer mortgage deals. This is a lump sum paid to new borrowers upon completion of a mortgage and can be as high as £1,000 in some cases. It’s worth noting that you may end up paying a higher interest rate on mortgages with cashback although this will vary from provider to provider.
Free standard valuation
On some mortgage deals we’ll cover the cost of a standard mortgage valuation. You should be aware that this excludes second or subsequent valuations and doesn’t include the cost of obtaining a survey. If you decide to change your loan amount after we have got your valuation, you may need to cover the cost of a new valuation.
Free Remortgage Legal Service
This is dependent on the remortgage deal you select. This service, offered in conjunction with Optima Legal, covers the legal costs to complete a mortgage with us. Read our applying for a remortgage guide for more details on this incentive.
Finding the best mortgage deal
If you’re ready to apply for a mortgage or if you’re thinking about getting a mortgage and have just started researching available mortgage deals, it can seem like there are an overwhelming number of deals available.
Comparison sites can be used to help find a mortgage deal suitable for your particular needs. Whilst you may find some deals that seem attractive due to their low interest rate (and therefore potentially lower monthly mortgage payments), you should also check the fees connected to the mortgage and make sure that the Loan to Value (LTV) is suitable for you - this is the proportion of the amount being borrowed for your mortgage to the property’s value. Generally mortgage deals with lower interest rates will have a lower LTV so you would need to pay a bigger deposit upfront.
To make things easier when you are looking for a mortgage, we’ve put together some tips to help find the best deal: