Guiding you through the mortgage maze

In the ongoing financial climate, buying a house and arranging a mortgage is as daunting as it has ever been.

With latest figures from the Bank of England suggesting that mortgage approvals recently fell to a record low – home hunters are feeling the pressure, not only to find a mortgage that suits them and which they can afford, but in working their way through the jargon.

Helping to guide customers through the mortgage maze is the plain-speaking Mortgage Advice Centre (TMAC), a service working in association with Harrison Murray estate agency.

TMAC has mortgage consultants in many of Harrison Murray’s 18 branches, offering the human touch to what may seem a daunting and confusing prospect – arranging a mortgage.

Ian Gibbons, managing director of TMAC said: “Often, the starting point is understanding the wide range and ever changing types of mortgages available and what suits an individual’s personal and financial circumstances.”

Here is a TMAC guide to help you navigate the mortgage minefield:

Remortgage
Simply switching your mortgage loan from one lender to another without moving house.

Buy to Let Mortgage
A mortgage that is used to purchase a property intended for rental. Most Buy to Let mortgages are not regulated by the FSA.

Interest Only Mortgage
A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way. It is your responsibility to ensure you have sufficient funds to pay off the mortgage at the end of the term.

Repayment Mortgage
A mortgage that pays off both the initial loan and the interest that accumulates on that initial amount over the term of the mortgage. This assumes all monthly mortgage payments are made as required by the Lender.

Capped Rate Mortgage
A mortgage that is variable but fixed not to go above a set level (the cap or ceiling) during the period of the deal.

Cashback Mortgage
A Cashback mortgage normally offers a cash amount that is paid by the lender to a customer at the beginning of a mortgage contract. There are usually early repayment charges, which can mean you are locked into a rate for a set period of time.

Discounted Rate Mortgage
This has a discounted variable rate of interest for a set period, after which the rate will increase. Restrictions may apply.

Fixed rate Mortgage
A fixed rate mortgage will charge a set rate of interest over an agreed period of time. This period varies - one year, two, three years, five years and occasionally longer. At the end of this fixed rate period, your mortgage will normally revert to the lender's standard variable rate.
A fixed rate mortgage can offer very favourable terms initially, but early repayment charges may limit the flexibility you have to switch to another lender.

Flexible Mortgage
A flexible mortgage allows the borrower to make overpayments when they have funds spare. A number of flexible mortgages also allow the borrower to reduce or miss payments altogether when funds are low (usually only if overpayments have been made in the past). For this reason, a flexible mortgage can be useful for the self-employed where income fluctuates. Restrictions may apply.

Tracker Mortgage
A tracker mortgage links the interest rate payable on the loan to a benchmark, such as Bank of England base rate. When the Bank of England base rate moves either up or down, your interest moves with it.

Standard Variable Rate Mortgage
A loan at the lender’s normal mortgage rate – i.e. without any discounts or deals. It moves up and down at the lender’s discretion.

Secured loan
An additional loan obtained through an alternative lender other than the existing mortgage lender. Both lenders retain a legal interest in your property. When a loan is ‘secured’ on your home it means the lender can repossess you home and sell it to get its money back if you don’t keep up your repayments.

For more information contact your local branch of Harrison Murray to speak with your local TMAC adviser or visit: themortgageadvicecentre.co.uk

* Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice, the precise amount will depend on your circumstances, the typical fee is £399.