| Investment Mortgage - More commonly known as a | | | | Stock Market and therefore cannot guarantee to |
| buy-to-let mortgage, this type of deal involves getting a | | | | cover the whole capital at the end. Payments into the |
| mortgage on a property which you intend to rent out | | | | pension plan must be kept up regardless of other |
| to someone else. Instead of being calculated according | | | | financial hardships if the final sum is to stand a chance |
| to your income, an investment mortgage is calculated | | | | of clearing your capital, but as a pension plan is not |
| based on the projected income from your investment, | | | | legally accessible until after the age of 55, some of the |
| for example a house being rented out as student | | | | temptation to spend it is removed. One major |
| accommodation. A BTL mortgage deposit is typically | | | | disadvantage this has over a repayment mortgage is |
| 10%, and is available is a repayment or interest-only | | | | that there is no opt-out; you're tied to the deal until you |
| option. | | | | reach retirement age. Potentially this could mean a |
| Key Worker or Shared Ownership Mortgages - | | | | term much longer than the standard 25 years, and |
| These are a newer type of deal which allows | | | | therefore more interest would be paid. |
| someone in rented accommodation from a Council or | | | | Repayment Mortgage - We come to the mainstay of |
| housing association to purchase part of the property | | | | the mortgage industry, and the most common type of |
| they occupy, while still paying rent on the other half. | | | | deal. A repayment mortgage is the only way you are |
| This option is also available for 'key workers' such as | | | | guaranteed to have full ownership of a property at the |
| nurses, teachers or police officers, who are typically on | | | | end of the term, provided you've kept up with |
| lower incomes. First-time buyers can also benefit from | | | | repayments. The amount you pay each month on this |
| these schemes, as there are some which allow | | | | type of mortgage is used to pay off part of the |
| part-purchase of new homes from participating | | | | interest and part of the capital, so there is nothing left |
| builders. | | | | to pay at the end of the mortgage period. The early |
| Offset Mortgage - If you have substantial savings, an | | | | years of a repayment mortgage are mainly spent |
| offset mortgage can be a great way to keep your | | | | paying off the interest and only a small amount of the |
| repayments to a minimum. It takes the amount you | | | | capital, but this is often preferable to other types |
| have in a savings account and counts this towards | | | | where you pay off nothing but the interest. |
| you total mortgage debt and therefore reduces the | | | | Remortgage - If you're part-way through paying off |
| amount you owe. When you earn interest on your | | | | your mortgage, and find you need a large amount of |
| cash savings, you avoid paying interest on the | | | | cash for repairs, renovations or perhaps even a |
| equivalent amount of your mortgage. The principle is | | | | holiday or wedding, you could remortgage your home |
| similar to a current account, or combined mortgage | | | | and release some of the equity on it. This often |
| (see part 1). | | | | involves switching lenders to find a better deal i.e. a |
| Overseas Mortgage - This is self-explanatory; it's a | | | | lower interest rate, or perhaps taking out a new |
| mortgage you take out on a property abroad. It | | | | mortgage for the full property value and using this |
| typically involves more work and potentially higher | | | | cash to pay off your current, lower, one. But be careful |
| admin costs, and of course if you're planning on renting | | | | if you decide to do this, as there may be an early |
| out the property to tourists you need to make sure the | | | | repayment penalty on your existing mortgage. |
| demand is there. But if you choose the location | | | | Self-certification Mortgage - Often assumed to be only |
| carefully you could reap the rewards and recoup your | | | | for the self-employed, this type of mortgage is useful |
| initial costs. Different countries have different property | | | | for anyone who cannot guarantee or prove an exact |
| laws so you're better off consulting with a specialist | | | | income amount or do not wish to disclose their total |
| overseas mortgage broker before making any final | | | | annual salary. People such as seasonal workers or |
| decisions. | | | | freelancers, or perhaps company directors who do not |
| Pension Mortgage - This is a form of endowment | | | | have a fixed annual salary are all eligible for a |
| mortgage, with the repayments going towards paying | | | | self-certification mortgage. Other than the standard |
| the interest each month. But instead of investing | | | | credit checks, there are no checks made on your |
| directly in shares, a pension mortgage requires you to | | | | financial status, income or employment record, so it |
| pay an additional sum into a pension plan to cover the | | | | stands to reason that a good credit rating is |
| capital at the end of the term. This is still tied to the | | | | necessary for this mortgage. |