At Sapphire Mortgages, we can help obtain a variety of mortgages that are tailored to your individual needs. You may want lower payments or the certainty of a fixed rate mortgage over a certain period of time - we’re here to help.

Sapphire Mortgages have helped thousands of people to buy their first home or change mortgage lender.

“The base rate is at a historic low, and therefore it is very unlikely that the base rate will fall in the near future” (2010)

fixed rate mortgage

What is a fixed rate mortgage?

A fixed rate mortgage makes it easy to plan ahead, because as the name suggests, the interest rate on your mortgage stays fixed. This means that as a fixed rate mortgage customer, even if the Bank of England Base Rate or our standard variable rate changes, the interest rate on your mortgage remains constant over a fixed period of time. This makes your budgeting easier, because you can plan ahead knowing exactly how much your monthly repayments will be.

What are the benefits of a fixed rate mortgage?

Fixed rate mortgages can be good for first time buyers and anyone on a budget who needs the stability of a set monthly repayment. With a variable rate mortgage your payments may go up and down according to the Bank of England Base Rate. However with a fixed rate mortgage you have the security of knowing the exact amount you will repay each month, despite any changes in interest rates.

Having a UK fixed rate mortgage means the interest rate depending upon the fixed rate products available at the time, you will pay is set for a specified period. Lenders have a range of fixed rate mortgage terms available usally between 2 - 10 years. Once the fixed rate period is at an end, your repayments will revert to the lenders standard variable rate.

Disadvantages of Fixed Rate Mortgages

Obviously, if interest rates fall, you will not benefit and will be locked into making higher payments. Often lenders charge a higher premium for guaranteeing a fixed level of interest. Often fixed rate deals work out more expensive than variable rate mortgages .Usually fixed rate mortgages incur early repayment charges if you wish to leave before the time period is up.

tracker mortgage

If you would like a mortgage which has an interest rate that follows the Bank of England’s Base Rate, then a tracker mortgage could be the one for you.

What is a tracker mortgage?

The interest rate tracks whatever rate is set by the Bank of England with a constant differential. The result on your monthly mortgage interest payments is that they go up when the base rate goes up and go down when the base rate goes down.

What are the benefits of a tracker mortgage?

A tracker mortgage is a variable rate mortgage which follows the Bank of England’s Base Rate, so your payments will change in accordance with external market interest rates. The rate on your tracker mortgage maintains the same differential between the rate you pay and the interest rate set by the Bank of England.

As and when the Bank of England raises UK interest rates, the cost of your tracker mortgage will rise as well. Lenders have a range of tracker mortgages available, which Sapphire Mortgages can help you with

Disadvantages of a Tracker Mortgages

If the rate being tracked increases, your interest rate and monthly mortgage payments will also increase, which can make budgeting rather complicated. If rates increase rapidly then mortgage payments could become unaffordable. After the initial incentive period ends, your rate will normally remain linked to the rate being tracked but at a higher percentage above it, this means that there may be a large increase in your monthly repayments

capped rate mortgages

A capped mortgage is similar to a fixed rate in that it will not rise above a pre-set rate, known as the cap. However if the lenders standard variable falls below the capped rate your rate will fall in line with it. If the lenders variable rate rises above the capped rate your rate will not rise above the capped rate.

Capped and collared mortgages

Many capped rate mortgages will have a minimum rate they can fall to known as the collar. As one of the main benefits of a capped rate mortgage is your mortgage payments reducing as interest rates fall, it is important to check the small print of a capped rate mortgage scheme.

Tracker capped rate mortgages

Some mortgage lenders now offer capped rate mortgages which track track the bank of england base rate instead of being linked to the lenders standard variable rate. These tracker capped rate mortgages can be beneficial as they guarantee to fall if the bank of england reduces the base rate. In the event of a base rate change the products rate will typically change after 14 working days.

Disadvantages of capped rate mortgages

On the whole, capped rate mortgages are slightly more expensive that equivalent fixed-rate mortgage loans, making them less attractive to some borrowers. Furthermore, flexibility is usually limited, and early redemption penalties can be high. Capped rate mortgages also often attract high application fees, although not in all cases.

discounted variable rate mortgage

A Discounted Variable Rate Mortgage has an interest rate where a discount is applied to the lenders standard variable rate for a set period. As the lenders standard variable rate moves up or down the discounted rate moves up or down by the same amount.

Discounted rate mortgages are often offered for a set period of time usually two years, though some mortgage lenders now offer discounted rates up to 3 and 5 years.

When you compare discounted rate mortgages it is important to check that the cheap discounted rate mortgages do not have an extended redemption penalty period. Extended redemption periods prevent you from the flexibility of changing you mortgage without being charged a redemption penalty. They also could tie you to the mortgage lenders variable rate for a number of years after the discounted rate period ends.

Disadvantages of Discounted & Variable Rate Mortgages

The foremost danger with variable rate mortgages is a large increase in Bank of England base interest rates, and a subsequent increase in lender standard variable rate. The ability for mortgage borrowers to budget is also reduced, and if interest rates slide lenders do not have to pass this down to borrowers.

fix and track mortgages

This is a new kind of mortgage deal designed to appeal to borrowers who want the security of an interest rate that starts out fixed, but don't want to get stuck paying over the odds if rates begin to fall.

It kicks off with a fixed rate for, say, a year and then turns into a tracker, with interest charged at a set percentage above the Bank of England's base lending rate for the rest of the mortgage term.

Advantages - This kind of deal is likely to be especially appealing at times when interest rates are rising but are expected to stabilise or fall in the relatively near future.

The initial fix protects you from further increases, while moving to the tracker rate without the costs or hassle of having to remortgage allows you to benefit right away from any subsequent falls.

Unsurprisingly, a best-of-both-worlds deal like this comes at a price.

Disadvantages - The interest rate for the fixed period and the percentage it then tracks above base rate may both be higher than for market-leading traditional fixed or tracker deals.

You may need quite a substantial deposit to be accepted for this type of mortgage which will probably make it more suitable for remortgage customers than the average first-time buyer.

There is likely to be an early repayment charge which stretches well beyond the initial fix, to ensure you don't take advantage of this then move to a better deal with another lender.

Of course, you may decide a fix-and-track deal is still worth having.

standard variable rate

Every mortgage lender has a standard variable rate, or SVR, of interest on which it bases all its mortgage deals.

The standard variable rate is, in turn, based on the Bank of England's base lending rate and this is decided at monthly meetings of the Bank's monetary policy committee, or MPC.

Every time the MPC raises its rate, mortgage lenders race to increase their standard variable rates, generally by the same amount.

And every time the MPC lowers its rate, the lenders do too, only often not so quickly But that doesn't mean mortgage lenders charge the same as the Bank of England.