The best mortgage for you will depend on your circumstances, plans, and whether you want to live in or rent out the property.
A mortgage is a long-term agreement. Take time to think about what you want and how much you can afford.
Here's a guide to some of the different types of mortgages to help you find one that suits you.
A fixed-rate mortgage will mean your monthly payments should stay the same until an agreed date, no matter what happens to interest rates in the market.
Fixed-rate periods come in various lengths, for example, 2, 3, and 5 years.
Tracker mortgages follow the Bank of England’s Base Rate and rise or fall along with it. The interest rate charged is the Bank of England’s Base Rate plus an agreed margin. There are ‘lifetime’ trackers for the life of the mortgage and term trackers, which may be for 2 or 3 years.
HSBC currently offers term trackers.
The SVR is the rate of interest that’s usually charged once a fixed rate or term tracker period ends. You can often move to another fixed mortgage or tracker product instead of moving onto a SVR.
Some lenders may also let you take out a mortgage on their SVR. Your lender decides the rate and may increase or decrease it throughout your mortgage.
Currently, customers can’t apply for an SVR mortgage with HSBC.
When deciding on a mortgage, you also have payment choices to make:
These options need careful consideration.
With a capital repayment mortgage, the monthly repayments include an element that repays the borrowed capital and a payment for the monthly interest of the loan.
With this repayment method, you can ensure your mortgage is paid off at the end of the mortgage period.
With an interest-only mortgage, your monthly payment only covers the interest charged on your loan for that month, so the amount you owe in capital doesn’t reduce over time.
You'll need to demonstrate to the lender that you’ll have some way of paying off the debt in the future (such as an investment or a second property you could sell). Interest-only mortgages are commonly chosen when buying to let.
A 95% loan-to-value (LTV) mortgage allows buyers to contribute a 5% deposit. If eligible, you could potentially borrow up to 95% of your property’s value or the purchase price (whichever is lower).
You’ll need a buy-to-let mortgage if you’re buying a property to rent out. A buy-to-let investment can be a big commitment, so you need to consider the costs, risks, and responsibilities of becoming a landlord or landlady.
We have a range of mortgage calculators to help simplify things for you, from finding a mortgage to calculating the impact of an interest rate change on your repayments.
If you’d like advice and support, our mortgage advisors are here to help. They’ll review your financial situation and provide suggestions and recommendations based on the information you provide.
Your property may be repossessed if you do not keep up repayments on your mortgage.
