| INTEREST RATE |
HOW IT WORKS |
ADVANTAGES |
DISADVANTAGES |
| FIXED RATE |
Payments are fixed at a set interest rate for a given period. An arrangement fee may be payable. |
- Allows you to budget ahead for a predetermined period.
- Provides protection against rising interest rates
- Most fixed rates are portable if you move during the fixed rate period.
|
- Many arrangement fees are non- - refundable.
- Large penalties often apply for early repayment of capital
- Some penalties go beyond the end of the fixed rate period
- You may lose out if variable interest rates dip below the fixed rate level.
|
| CAPPED RATE |
Payments are made at the lenders' standard variable rate with the guarantee that it will be "capped" for a given period. An arrangement fee may be payable. |
- Provides protection against rising interest rates.
- Potential to benefit if standard variable rate decreases
- Most capped rates are portable if you move during the capped rate period.
|
- Many Arrangement Fees are non-refundable
- Large penalties often apply for early repayment of capital.
- Some penalties go beyond the end of the capped rate period
|
| DISCOUNTED RATE |
You pay interest at the standard variable rate less a discount for a given period. An arrangement fee may be payable. |
- Provides a guaranteed saving
- May provide savings in the early years when needed most
- Most discount rates are portable if you move during the discounted rate period
|
- Provides no interest rate protection
- Large penalties often apply for early repayment of capital.
- Some penalties go beyond the end of the discounted rate period
- You will be unable to budget ahead accurately
|
| CASHBACK |
You pay interest at the standard variable rate and are given a lump sum payment to spend in a way you choose. An arrangement fee may be payable. |
- Provides a lump sum after you move in
- Could be useful to cover additional costs
|
- No Interest Rate protection
- Large penalties often apply for early repayment of capital.
- You will be unable to budget ahead accurately
|
| STANDARD VARIABLE RATE |
Rate paid is set by market conditions. |
- Very flexible.
- With most lenders' there are no early early repayment charges.
|
- No interest Rate Protection
- You will be unable to budget ahead accurately.
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