When fixed term is up? then what?

myright

Hey guys

Just trying to improve my understanding of mortgages

Lets say I get a fixed rate mortgage for 5 years. I suppose after this time frame you will be automatically put onto a SVR of the lender. Is this correct?

Also if you choose to get on another fixed rate for another lets say 3 years after your existing 5 years fixed rate has ellapsed. Are there any implications? as in Will you then need to pay an Early Repayment Fee? logically thinking this wouldn't apply as your not existing from the mortgage?? would we need to remortage after the 5 yrs have ellapsed? which will cost a remortaging fee? if so how much would the fee be on average these days? is my understanding correct till this point?

Also obviousily there are many factors involved when choosing the right mortgage. Lets say for residential reasons and not BTL ( as interest only mortgage in my opinion would be better suited). What are the most practical and best mortgages these days? I hear it's a long term tracker rate? which monitors the Base Rate set by the BoE.

Also what is the difference between discount and a fixed tariff. they both seem to be the same really ?

Sorry guys for all the newbie questions I am trying to grasp some solid understanding of all this.

pjread

Sounds like you need a broker

Generally I don't think current products have extended tie-in's (early repayment charges after the fixed/promo rate period) but as for the rest it's largely opinion. Think there's a fairly good MSE article, maybe worth a read for you.

myright

lol thanks... But I am not attending to buy a house or anything. I am just trying to develop my knowledge on the basics

kingstreet

If the "follow-on" rate from a product is the lender's standard variable rate, that is the rate which will apply when any special offer period ends.

The follow-on rate may not be the lender's SVR. You would check the key facts illustration before choosing the product.

If you take an existing lender's offer of a customer retention product instead of the follow-on rate, you would do it after any early repayment period has ended. There may be a product, or arrangement fee. This is dependent on lender and product.

At some point, you may wish to remortgage to a new lender. You would pay any discharge fee to leave your current lender. If you attempted this during the currency of a special offer, you may have early repayment penalties to pay. Your new lender may levy fees for the remortgage. This is dependent on lender/product.

You will not get interest-only on a residential mortgage, unless you have some very specific characteristics, such as high income, a repayment plan and a low loan to value. BTL is still interest-only based, but you can't use a BTL product for your own residence.

The best mortgage is the one which most closely meets your needs and requirements. There is no best for everyone.

A discount is an agreed reduction in the lender's standard variable rate for an agreed period of time.

A fix is a rate which cannot rise or fall for an agreed period of time.