Expatriate mortgage types
The types of mortgage available to you as an expatriate are basically the same as those available to UK residents.
The first choice to be made is between a Capital Repayment mortgage and an Interest Only mortgage. The current lending climate in the UK dictates that the first choice for all borrowers should be a Capital Repayment scheme, indeed for many lenders this is the only type of mortgage they offer. The monthly payment to the lender consists of part interest and part capital, this benefits you as a client by guaranteeing that your mortgage debt is cleared at the end of the mortgage term.
The Interest Only option will provide you with a lower monthly repayment, however at the end of the term you will still owe the capital that you borrowed at the outset. A mortgage lender will only consider lending to you on an Interest Only basis these days if you can provide proof that you will have the means to repay the capital borrowed at the end of the mortgage term. The only exception to this rule is with a Buy-to-let mortgage.
INTEREST RATE OPTIONS
The second choice that you will have to make is between a Fixed Rate deal and a Tracker Rate deal. The title Fixed Rate is a good description of this type of deal. The rate of interest that you are charged is fixed for a fixed term, typically 2 to 5 years from UK providers. This type of scheme is ideal if you need to budget accurately or if you feel that interest rates are likely to rise.
The second option of a Tracker Rate is more suited to periods when you feel interest rates are likely to fall. The rate of interest that you pay is linked to an indice, normally the Bank of England bank rate, which will rise and fall as the markets dictate. This means that your mortgage payments will also rise and fall. Again these schemes normally last for a 2 year period on average.
At the end of either a Fixed Rate or Tracker Rate deal you will be presented with two main options. The first will be to select a further Fixed or Tracker product subject to availability, the second will be to revert to the lenders Standard Variable Rate.
