Understanding different types of mortgages

Fixed rate mortgage

We can give you a fixed rate mortgage quote that allows you to pay a set amount each month for a specific period. The advantage is that you know exactly how much you will have to pay each month so you can budget more easily.

Variable rate mortgage

If we change our Standard Variable Rate then the rate you pay will alter accordingly. If the rate rises then your payment will increase, if the rate decreases you will benefit from a reduction in your monthly payment.

Discount rate mortgage

Some of our mortgages come with an initial discounted period which is linked to our Standard Variable Rate. If our Standard Variable Rate changes the rate you pay will change as well. If the rate goes up then your payment will increase, if the rate goes down your rate will also decrease.

Base rate tracker mortgage

Your mortgage rate will reflect the Bank of England base rate. If the rate increases then your payment will increase, if the base rate falls you will benefit from a reduction in your monthly payment.

Offset mortgage

This allows you to offset your savings against the value of your mortgage balance. This offsetting could save you thousands of pounds and reduce the term of your mortgage.

There are a number of mortgage types for those in particular circumstances, including:

Joint Mortgage Sole Proprietor (JMSP) mortgage

Joint Mortgage Sole Proprietor (JMSP) mortgages use the income of a family member in order to increase your borrowing capacity. By combining your income with that of a family member means you can borrow more.

Self-build mortgage

A self-build mortgage allows you to borrow money in a number of pre-agreed stages as your property is built, so you get the most suitable mortgage rate for your project by borrowing in stages. The simple process requires you to provide details of your proposed project, together with the costs involved.

Self-employed mortgage

More people are becoming self-employed every year, and at Newcastle Building Society we don’t think being self-employed should stop you from getting a mortgage. That’s why we created a specific range of products tailored to those in self-employment. We also accept applications from customers with only 1 years’ accounts so you could get on the property ladder sooner.

As well as mortgage type, there are payment choices available for you to consider.

Repayment mortgage

This involves paying back the interest on the amount borrowed from us as well as paying off the capital borrowed. At the end of the mortgage term you will know that you have repaid all the interest and the capital, so you will own your home outright.

Interest only mortgage

By selecting an interest only mortgage, you will only pay interest (on a monthly basis) and not reduce the amount you have borrowed, known as the capital balance. This means that you’ll need a plan in place (e.g. endowment policy, ISA, sale of property) to repay the balance at the end of your term.

You are responsible for ensuring that you will be able to pay off the capital borrowed at the end of the mortgage term and it is important that you regularly check your mortgage repayment plan to make sure it’s on track to repay the loan amount when your mortgage comes to an end.

Early repayment charges (ERC)

Some mortgages include early repayment charges (ERCs). Please make sure you read mortgage product terms and conditions carefully and are aware of any such charges or fees.