TYPES OF MORTGAGE GUIDE

The payments you make every month repay a part of the amount you borrowed, plus that month’s interest. So by the end of the term, provided you have made all due payments on time, you’ve repaid the full amount.

Advantages:
• You have the reassurance of knowing you will have repaid your mortgage in full by the time it comes to an end
• Depending on the conditions of the mortgage product you choose, you can make overpayments and lump sum payments, which reduce your interest and capital payments

Disadvantages:
• In the early years, your payments will be mainly made up of interest, so if you want to repay the mortgage or move house in the early years, you’ll find that the amount you owe won’t have gone down by very much.

The payments you make every month only cover the interest. So you pay less each month but at the end of the term you still owe the full amount you originally borrowed and that has to be paid back. This means you need to have some way of repaying the amount borrowed, like savings or an investment product.

Advantages:
• If the investment fund is greater than the amount needed to pay off the mortgage, you will have an additional cash lump sum
• Some plans are tax-efficient

Disadvantages:
• If the investment fund is less than the amount needed to pay off the mortgage, you will have a shortfall that you will have to make up
• Cashing in an investment plan early may result in financial penalties
• If you wait until the end of the term before paying back the loan, you’ll pay more interest than the interest charged on an equivalent repayment mortgage, because you pay interest on the whole amount over the whole term.

The annual percentage rate (APR) is the best way of comparing mortgage rates. It is worked out in the same way for every mortgage and includes all charges so shows the true overall cost of your loan and a lower APR should mean a cheaper mortgage.

With a Fixed Rate mortgage, your payments stay the same for a fixed period of time - no matter what happens to interest rates and how high rates go. This can help you to budget and plan ahead for life’s ups and downs.

Principality offer a competitive range of Fixed Rate mortgages for periods of 2 to 4 years.

Our Tracker mortgages move up and down in line with the Bank of England Bank Rate, for a set period. So, if the Bank Rate falls, so will your monthly payments, within 30 days of the change. Of course, if the Bank Rate goes up, your payments will too so you need to ensure that your budget will allow you to make higher repayments in this case. You might choose a Tracker mortgage if you think rates will stay low.

There may be a minimum interest rate on a Tracker mortgage which means if the Bank Rate falls below a certain level, your monthly payments will not reduce further.

These Variable Rate mortgages are discounted against our Standard Variable Rate for a set period. Discount mortgages can make your payments in the early years easier to manage and can free up money for you to spend on your home.

The discount is usually a stated percentage below our Standard Variable Rate, and it may reduce in steps as your mortgage term progresses, so that you gradually work your way back up to our Standard Variable Rate.

Our Fee Saver mortgages reduce the fees involved in mortgaging your home. This means there might be no product fee, no legal fees if you are remortgaging from another lender and you use our appointed solicitors, and no valuation fee.

Fee Saver mortgages free up money to spend on your home, often when you need it most.

Whether you’re considering your first investment property, buying a holiday let or expanding your portfolio of property to rent out, we can help.

You can choose from Fixed and Tracker Buy to Let mortgages, for both new purchases and remortgaging, up to a maximum of 10 properties or £1 million of lending, whichever comes first.

Shared ownership and shared equity are the two main types of low-cost home ownership schemes run by the Government to help people who cannot afford to buy on the open market to purchase their own homes.

Shared equity means that you are able to buy a property at a discounted purchase price and the builder or Registered Social Landlord (RSL) provides funding for the remaining balance. This funding does not need to be repaid until the property is sold, and you do not have to pay rent. You will usually be given the option to buy the remaining portion after a set period.

Shared ownership means that you buy a share of a property and pay rent to the Registered Social Landlord who owns the remaining share. Your monthly outgoings will include repayments on your mortgage and rent for the part of the property not owned by you. You may be able to increase your share until you own the whole property – this is called staircasing.

Principality offer a range of shared equity and shared ownership mortgages through our branches. We do not require a deposit for purchases in association with Registered Social Landlords, and we only require a 5% deposit for purchases in association with a Builder.

• Use our mortgage calculator to work out how much you can borrow and what your monthly repayments would be. 
• Take a look at our mortgage offers. 
• Get an agreement in principle online, or if you prefer, visit your local branch, or call us on 0845 045 0006 (between 8am and 8pm weekdays, except Wednesdays 9.30am to 8pm, and 9am to 1pm on Saturdays.