Question 1

Will I pay more with a flexible mortgage?

Accepted Answer

You may have to pay a bit more for the added freedom offered by a flexible mortgage - or a mortgage with lots of flexible features.

This could be in the form of higher set-up fees and/or a higher interest rate than a standard deal.

However, many of the best mortgages offer some flexible features; the trick is to find the mortgage that offers the right combination of cost and flexibility for your needs.

Question 2

What fees are involved in flexible mortgages?

Accepted Answer

A flexible mortgage is really just a standard mortgage with additional features, so the types of fees you'll pay should be the same.

Common examples of these include arrangement fees, booking fees, valuation fees, and exit fees - although some lenders waive one or more of these on certain deals.

However, you may have to pay higher fees to access a mortgage with flexible features - as pay off for the extra wiggle room.

Question 3

Do you need a larger deposit to get a two-year fixed-rate mortgage?

Accepted Answer

Some two-year fixed-rate mortgages can be taken out with a very small deposit, say 5% of the property’s value. However, as with all mortgage borrowing, the bigger your deposit, the better the interest rates you’ll be offered by lenders. The best rates are usually available for buyers with a deposit in excess of 40% of the purchase price.

Question 4

How much can I borrow on a 2 year fixed rate?

Accepted Answer

How much you can borrow will depend on your circumstances. Lenders have specific criteria, regardless of whether you’re opting for a two-year fixed-rate or a five-year variable-rate deal. Factors that impact how much you can borrow include: How much you earn - most lenders will offer at least four times your salary How much you can put down as a deposit - the bigger the better How much you already owe - other loans and credit cards  How much you spend - for example on household bills or child maintenance

Question 5

Are fixed-rate mortgages cheaper than variable-rate mortgages?

Accepted Answer

Not necessarily; fixed-rate mortgage deals are often more expensive than similar deals charging a variable rate of interest at the start. However, they offer more security, as the rate you pay will not change even if interest rates go up. They can therefore prove cheaper over the longer term if interest rates rise during the fixed-rate period. If, however, interest rates fall, you could end up on an uncompetitive rate.

Question 6

Can I get a 2 year fixed buy-to-let mortgage?

Accepted Answer

Yes, you can take out a buy-to-let mortgage that has a fixed rate for two years. You can check out the deals available with our handy comparison tool.

Question 7

What fees are involved in two-year fixed-rate mortgages?

Accepted Answer

Taking out a mortgage involves paying various fees. These can include a booking fee of up to about £250, an arrangement fee, which can range from £0 to more than £2,000, and an administration fee of around £100 to £300. You’ll also have to pay ERCs if you want to pay the mortgage off early, for example to switch to a cheaper deal. These can be up to 5% of the amount owed. When you exit the mortgage, you may also have to pay an exit fee, which can be up to £300.  When searching for the best 2 year fixed rate mortgage, it’s therefore important to consider the total cost including fees, not just the mortgage rate on offer. The best way to do this is by looking at the total cost over the initial deal period.

Question 8

What are interest rate floors and interest collars?

Accepted Answer

Interest rate floors and collars amount to the same thing. If your variable-rate mortgage has a floor or collar it means your rate can’t fall below a certain level. For example, if you have a tracker deal that is collared at 0.5% it means your rate will never go below this level whatever happens to the base rate.

Question 9

What happens when my tracker mortgage rate ends?

Accepted Answer

Unless you switch to a new deal, your lender will start charging repayments using its standard variable rate (SVR) of interest, which is usually higher. Most people will save money by switching rather than paying the SVR. You can take out a new deal with your current lender or remortgage with a different one.

Question 10

What fees will I pay for a tracker mortgage?

Accepted Answer

As with all mortgage deals, you could pay a product fee, which could be up to £1,000 or more. You may also pay valuation fees and legal fees, depending on the deal.  Make sure you factor in the fees you’ll pay when you’re comparing the cost of deals as they can make a deal with a lower rate more expensive overall. The best way to do this is by looking at the total cost over the deal period.  Find out more about the different mortgage fees that may apply.

Question 11

Should I pay off my tracker mortgage early?

Accepted Answer

It depends on whether you will have to pay early repayment charges (ERCs) to do so. You may want to pay your mortgage off early to switch to a better deal, but if you have to pay ERCs, they could wipe out any savings you would make. Consider speaking to a mortgage broker to find out whether paying off your tracker mortgage early is worthwhile.

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