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Property Know How

Mortgages

Base Rate Tracker Mortgage

These can get very complicated but in theory they're simply a mortgage that tracks the Bank of England base rate at an agreed rate.
So you might have a Base Rate Tracker Mortgage which sets your mortgage at 1% above the base rate for, say, the first two years.

Bridging Loan
This is a loan that is usually taken out to solve a temporary cash shortfall that may arise when buying a property or business, or perhaps paying for a renovation.
A typical example of when you may need a one would be if you want to buy a second property before you've sold your first.
Or you may need one if you're buying property at auction
As they are more risky for the lender than the usual house buyer’s loan, bridging loans are more expensive and should only be used where you are fairly certain to repay them within about 6 months.
Depending on the lender, a Bridging Loan can be obtained by the self employed or people with bad credit. In other words to those who traditionally have found it more difficult to get loans and mortgages.

How they work
In the case of buying property, a Bridging Loan is normally secured by getting a mortgage on the new property, and taking out a second mortgage on the property being sold. 
In this case the loan will depend on a positive valuation of the relevant properties.
Lenders will usually allow Bridging Loans of up to 65% of the value of the properties - less any existing mortgage. But this will depend on the lender so you can shop around for better deals.
You can usually borrow between £25,000 to £500,000 as standard.
Larger loans are possible but may take slightly longer to arrange.

Buy to Let Mortgages
Mortgage providers' traditionally only offered loans for people buying homes. An increasing number are offering loans for a property you want to "buy to let", (ie not to live in as your home, but to rent/let out to tenants).

Getting income from the rent is seen as a good investment by some and is becoming more commonplace.
It's particularly popular for retirement planning because of the growing concerns about the inadequacies of traditional pensions. The old saying "There's nothing more solid than bricks and mortar" is more relevant than ever.

The fears over the past couple of years that the market was overheated seem to have been incorrect. However make sure that your buy to let property is in an area which is likely to have a demand.
There is a wealth of information on buying property to let. Just make sure if you're paying for it that it's been written by someone with direct experience in the field.

Cashback deals

These deals vary but, as the name suggests, you get cash - in addition to the money you're going to be borrowing. You may use it to pay for moving costs and furniture etc.
Cashback deals are perhaps best seen as a sales technique to get you to take out a mortgage with a particular lender.
It's very rarely a genuine gift and is probably used to tie you in to the mortgage lender - who will eventually more than make their money back.

Capped Rate
This is an interest repayment variation.
Capped rate mortgages are supposed to offer the best of both variable and fixed rate deals.
You agree to have a limit - a cap - on the maximum amount of interest you will pay over a particular period of time while allowing it to fall if the variable rate drops.

Good points: You get the best of both worlds. If the variable rate goes higher than your agreed capped rate then you're only paying up to the agreed capped rate. Wheras if it falls below your capped rate then you pay less as well.
So you benefit from falling interest rates but are protected from rate rises. You know the max you'll be paying.

Bad points: There's only a limited number of these deals on the market and they're not thought to be very competitive because the interest rate you'll be paying is going to be higher than your average fixed or discounted rate mortgage.

You pay to get the best of both worlds.

Also there'll probably be an admin charge by the mortgage lender of £95 to £200 - though this may not be much compared to the amount you might have paid if your mortgage wasn't capped and interest rates went up...

However some mortgage lenders are now offering good deals which may even be cheaper than fixed rates.