Finding the right mortgage in Guernsey can be a lengthy process. There are many different types of mortgage available in Guernsey, each offering a different set of advantages and potential drawbacks. It is important to take out a mortgage that suits your current and future situations, however it can be difficult to know exactly what type that is.
The UK’s most popular mortgage option, fixed rate mortgages function exactly as the name suggests. The interest rate is determined for an initial period of usually 2 to 5 years. This means that should the Bank of England rates fluctuate during that period, your payments will not be affected and will remain the same. This gives you much needed security from a budgeting perspective. If you are happy to be tied to your mortgage for a fixed period, the fixed rate option could be a wise choice.
That being said, the fixed rate option does not offer as much flexibility as other mortgage types as fees can be incurred should you wish to transfer or break your mortgage before the end of the fixed term. However, upon completion of the fixed term there are options available to either re-fix or move your mortgage to an alternative option such as a Base Rate Tracker Mortgage.
Stable rate, easier to budget for.
Getting out of the mortgage can incur a penalty.
Due to the current market providing low interest rates, the three-year tracker mortgage is currently Oracle’s most popular choice for those looking for a mortgage in Guernsey.
The rates of a tracker mortgage are linked to the base rate of the Bank of England and so the initial rates are often lower than those of fixed rate mortgages. For example, if the base rate is 0.5% and your tracker mortgage rate is 2%, you would pay an interest rate of 2.5%. If that rose to 1%, you would pay 3%.
Whilst it is easy to keep track of the changes in base rate it is important to note that you should ensure that you are able to meet the additional cost of the mortgage payment should the interest rate increase.
Rates are often lower than fixed mortgages, easy to track the base rate.
Difficult to budget for, must be prepared for potential increase in rates.
If you are struggling to save for the deposit on a mortgage, a 100% mortgage may be the right choice. The next generation mortgage requires a guarantee from a close family member instead of a deposit. Such a guarantee can come in the form of a bond on his or her own property or an interest-bearing account holding at least 15% of the property’s loan to value. This can be a useful option if you are looking to place your first tentative steps on the property ladder.
No need to save up for a deposit.
You might be in negative equity if house prices fall.
The above types of mortgages are all available in Guernsey through Oracle, get in touch and we will help you find the one that meets your needs.