The mortgage market is a minefield and choosing the most appropriate facility is an essential part of your financial planning. Careful consideration should be given to deciding which type of mortgage best meets with your requirements, not just now but in the future.
Circumstances can change very quickly so it is important to seek advice from a genuine specialist that has a sound understanding of the vagaries of your profession. Mediclub has been arranging mortgages for doctors and dentists over many years and boasts a wealth of knowledge and experience in meeting the expectations of our members.
Flexibility is often the key and we take care in ensuring that any new arrangement does not disadvantage you in the future. Many practitioners require commercial finance as well as a domestic mortgage so prudent planning and careful structuring of your borrowing is advisable.
It is generally not sensible to use your main personal bank for your domestic mortgage or to restrict your lines of credit by imprudent use of credit cards and personal loans. An experienced adviser will assess your requirements in the light of both current circumstances and potential future needs before explaining carefully what options are available to you.
Our service is comprehensive and impartial. We understand only too well that the purchase of a house or flat can be an emotional transaction so we endeavour to be not only professional but also understanding and considerate whilst acting for you.
We will help you decide which type of mortgage is most appropriate, whilst helping you decide whether a fixed or variable rate is more favourable at the present time.
Capital & Interest
The monthly payment combines both repayment of capital and interest so that the loan is guaranteed to be repaid at the end of the mortgage term, often 25 years, depending on your age. The monthly repayment will vary with any change in the mortgage interest rate. Consequently, it is important to factor in a rise in interest rates to ensure continued affordability.
A mortgage has to be redeemed by the end of the specified term, more commonly as above with a combination of capital and interest on a monthly basis. However, in some circumstances, a lender will allow the payment of the interest charged only, leaving the borrower with the responsibility of repaying the mortgage at the end of the term, usually with a savings vehicle such as an ISA or pension.
As with a capital repayment mortgage, the monthly payment of interest may increase with a rise in the mortgage interest rate.
A flexible mortgage permits both the underpayment and overpayment of the loan with changing circumstances. It is also possible to build up a cash reserve from which funds can be drawn for other purposes or a financial emergency.
A variable rate mortgage links your monthly repayment to the prevailing rate of interest, which can change in line with the lender’s standard mortgage interest rate or the Bank of England Base Rate. Once again, careful budgeting is important to ensure future affordability is not a problem.
This is a facility whereby the initial rate at which interest is charged is lower than the standard variable rate for a specified period, eg. two years. It is invariably used as a marketing tool to attract new borrowers. It can be useful for professionals and younger practitioners in particular whose earnings are expected to rise within the discount period.
A fixed rate of interest for a period of, say, two or five years, can be very useful for borrowers wishing to be certain of their monthly repayments or whose income is limited and expenses high. Predicting the future movements of interest rates is a difficult call but the rate is often set in the lender’s interests so careful consideration should be given in determining whether it is worth paying a fee for. Furthermore, opting for a fixed rate invariably means sacrificing flexibility.
NB: Your home is at risk of repossession if you don’t keep up with your mortgage payments.