Barclays Woolwich Mortgage Selector: Which Mortgage is right for me?

Confused by the range of mortgage options? Read our beginner's guide.

Finding the right mortgage can be tough when there are so many products on the market. A mortgage specialist can help you decide based on your personal and financial circumstances.

When you apply for a mortgage you'll need to be able to provide evidence of who you are, where you currently live and what you earn (usually with three months of pay slips).

If you're self-employed, you'll need a letter from your accountant and/or an annual statement of your income - and when it comes to actually applying for a mortgage, you'll be asked to provide two or three years' worth of audited accounts.

There are some things to consider. Check whether the mortgage you're looking at ties you into buying other products from the same company. For instance, lenders may require that the freeholder has buildings insurance (to cover the cost of rebuilding or repair work to the structure).

There may also be early repayment charges that the lender will charge if you pay off the mortgage early or move it to another lender within a set period.

Repayment methods

Your mortgage adviser can explain the different types of mortgages available. Briefly, these are:

• Interest only - With an interest-only mortgage, your payments will only cover the interest on your mortgage. The amount of capital remains constant and it's down to you how you choose to repay the full amount you’ve borrowed at the end of the mortgage term. So it's important to remember that you'll need a suitable investment in place (such as an ISA), which you must regularly review to ensure that you're able to repay your mortgage in full.


We would recommend that you approach an Independent Financial Adviser to discuss the investment options available to you and the potential risks associated with your chosen strategy. Alternatively, a Woolwich Mortgage Adviser will be happy to answer any questions.

Bear in mind that problems can arise if your chosen investment doesn't perform sufficiently well to allow you to repay your mortgage. But if the investment performs better than expected, you may end up with some extra cash after you've paid off the mortgage.

• Repayment - you pay off the mortgage capital as you go along as well as paying interest so by the end of the term there's nothing left to pay. This is often seen as the safer option, as long as you keep up your repayments in full and on time.

Interest rates

Mortgage lenders can charge interest in a variety of different ways:

• Fixed rate - the rate is fixed for a set period: the shorter the time, the lower the rate will usually be. The advantage of this is that it makes budgeting simpler in the early years of your mortgage as you know exactly what you'll be paying every month. However, if interest rates fall below your fixed rate, you'll not benefit from this reduction. Early repayment charges and arrangement fees may apply. Once your fixed rate period has ended, you'll be switched to the Standard Variable Rate. You may therefore want to consider remortgaging as you approach the end of your initial offer.

• Standard variable rate (SVR) - this rises and falls in line with general interest rates so you should benefit from any drop. However, if general interest rates rise, your mortgage rate will increase too, along with your monthly repayment. There aren't usually any early repayment charges.

• Capped rate - your rate will rise and fall in line with your lender's standard variable rate but it'll never rise above the 'cap', which is set from the start of your mortgage contract for a specified period of time ('capped rate period'). This means that you know the maximum amount you'll pay during the capped rate period. If the lender's standard variable rate falls below the cap, you'll pay the lower rate for as long as this is the case. If the lender's standard variable rate later rises above the cap again, you just go back to paying the capped rate. Early repayment charges may apply. Once your capped rate period has finished, you'll be switched to the Standard Variable Rate.

• Discounted rate - you get a discount from the lender's base rate or SVR for a set period, which may represent a valuable saving. However, your repayments will still be variable so you don't have the certainty that you get with a fixed rate. This means discounted rates may not be ideal for those on a strict budget. If you have some spare money and rates are low and dropping, you could benefit. Early repayment charges may apply.

• Tracker rate - this rate is a set amount above or below the Bank of England or lender's base rate. The aim is to 'track' these base rates (whether they rise or fall). So you'll benefit from general interest rate cuts, irrespective of whether your lender decides to drop its mortgage rate in line with the base rate. However, if general interest rates rise, your mortgage rate will increase too along with your monthly repayment. There may be early repayment charges.

• Offset mortgages - Offsetting is a way of managing your money using your current account, savings account and offset mortgage. You can 'offset' the credit balances you have in your current and savings accounts against your mortgage balance and pay interest (at the mortgage rate) on the difference only.


This means you could potentially reduce the total amount of interest you pay on your mortgage. You will not, however, earn interest on your credit balances.


This type of mortgage can only really work for you if you have savings to offset or, for example, get regular bonuses.


When offsetting credit balances against the mortgage, you have the option of keeping your mortgage repayments as they are, thereby paying the mortgage off more quickly, or keep the original term and reduce your monthly repayments (please note your mortgage repayments may vary). Either option may provide substantial savings. Woolwich Offset Mortgages are on a tracker rate basis.

Remortgaging This is the process of moving your mortgage from one lender to another, or choosing a different type of mortgage from your current lender. Read our guide to remortgaging. How we can help See the range of mortgage services we offer: For first-time buyers For people moving home For customers who want to remortgage.

Link to previous articles: Barclays Woolwich Mortgage: Property Ladder-2 Barclays Woolwich Mortgage: Property Ladder Checklist for Buying a Home Barclays Woolwich Mortgage FAQ Barclays Woolwich Mortgage Glossary Barclays Woolwich Mortgage Reserve