As with any other loan, with a mortgage you borrow money and pay it back in instalments. These instalments include interest and are paid over a period of time agreed between you and your lender. This period of time is known as the mortgage term.
A mortgage differs from a bank loan or credit card because it's secured against your property. So, during the term of the loan, your property provides the lender with security. If for any reason you cannot keep up your monthly mortgage payments or repay your mortgage (upon expiry of the mortgage term), the lender can sell your home to recover their money. This is why it’s vital you only borrow what you can afford.
Your mortgage is likely to be the biggest financial commitment of your life, so think carefully about it. There are several different types of mortgage to choose from, and you need to decide whether you want a rate that changes as interest rates move or one that's fixed, so you know exactly what you'll be paying each month.
Remember, our mortgage advisers can offer you personalised advice to help select a suitable product.
A fixed rate mortgage is simply fixing your mortgage payments throughout the term of the deal. The terms is typically two, three or five years, but can be as long as 10 or 15 years depending on what different lenders offer as part of their range.
A fixed rate mortgage would work for you if:
- You want to know what your repayments will be every month.
- You want the security of knowing your payments will never go up during the fixed rate period.
A tracker mortgage follows the Bank of England Base Rate, so your mortgage rate moves up or down in line with this. For example, if your mortgage rate is 3%, the Bank of England Base Rate will be added to that each month. If the Bank of England Base Rate reduces or increases, this will affect your overall monthly rate and how much money you're expected to pay back each month.
A tracker mortgage would work for you if:
- You want to take advantage of reductions in Bank of England Base Rate.
- You don't mind the potential change in monthly payments, up or down.
All Virgin Money Mortgages revert to our Standard Variable Rate (SVR) at the end of the mortgage deal. Our SVR is the interest rate your mortgage moves to once the initial deal period (usually two to five years) has ended.