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Stepped Rate Mortgages explained, and how we can help with a Mortgage!

Stepped Rate Mortgages are a type of mortgage whereby the interest rate charged rises, or falls, on a staggered, or stepped basis, at fixed intervals during the initial period, which is often three years.

Here we take a more detailed look at Stepped Rate Mortgages, along with the different types of Stepped Rate mortgage, including examples of Stepped Rate Mortgages. We also look at how we can help with a Stepped Rate Mortgage as well as other kinds of mortgages - whatever your circumstances!

What is a Stepped Rate Mortgage?

So what exactly is a Stepped Rate Mortgage then? A Stepped Rate Mortgage is one where the interest charged will rise, or fall on a stepped (or staggered) basis. This will occur at fixed intervals during the initial period of the mortgage term, which is often 3 years.

Types of Stepped Rate Mortgages

There are a variety of stepped rate mortgage products in today's marketplace, and these are usually:

There is a further choice for you in that the rate can be a:

  • Step-down mortgage, or
  • Step-up mortgage

Stepped Rate Mortgage examples:

So, let's have a look at a few examples of Stepped Rate Mortgages:

(Increasing Fixed Stepped Rate) Mortgage 1:

Year 1: 4% Fixed
Year 2: 5% Fixed
Year 3: 6% Fixed

(Decreasing Fixed Stepped Rate) Mortgage 2:

Year 1: 6% Fixed
Year 2: 5% Fixed
Year 3: 4% Fixed

(Discounted Stepped Rate) Mortgage 3:

Year 1: 3% Discount off the lender's Standard Variable Rate
Year 2: 2% Discount off the lender's Standard Variable Rate
Year 3: 1% Discount off the lender's Standard Variable Rate

Why choose a Stepped Rate Mortgage?

You might be asking, 'What are the advantages of a stepped rate mortgage?'. Well, although there are fewer stepped-rate mortgage products in the marketplace, they can prove to be very beneficial in the following aspects:

  • first-time home buyers: where smaller payments would be of benefit in the early term of the mortgage when the costs of setting-up a home can be particularly expensive, or
  • those borrowers whose income may fluctuate during the initial years of the mortgage, for example for professionals attempting to qualify for their chosen career, when their income is likely to increase substantially on qualification, e.g. accountants, nurses, solicitors etc.
  • these stepped rate plans offer a preferential interest rate period, which can add-up to substantial cash savings. However, as with other mortgage preferentially-rated products, there will usually be some form of tie-in period, during which Early Repayment Charges (ERC's) will have to be paid.

Can Shire Direct help me with a Stepped Rate Mortgage or other type of mortgage even if I have credit problems?

You'll be pleased to know that the answer is yes, we usually can!

In an ideal world we would all have a good job that pays well, with no money worries, and a perfect financial track record. In reality though, many of us suffer a blip at one time or another - often through no fault of our own, and all too often find the door to mortgage or loan facilities shut!

Not so at Shire Direct!
We have developed an extensive portfolio of specialist mortgage lenders and schemes to help even in the trickiest of circumstances!

You'll find our approach to be friendly and helpful, and not at all judgemental. We will present the options available to you, carefully and in a language you can understand, rather than endless reams of confusing jargon. That's why Shire Direct has an enviable reputation for succeeding in arranging mortgages where others have failed.

So don't worry if you have experienced or have ongoing credit difficulties such as County Court Judgements (CCJ's), credit defaults or arrears. We can even help if you're in an Individual Voluntary Arrangement (IVA) or have been discharged from bankruptcy.

We also have a great range of plans for those who are in self-employment, in a business partnership, or who are company directors, and who may have difficulty in providing income proof. These schemes accept income self-certification, often referred to as self-cert., and which are ideal for the fastly changing circumstances of this group of business people.

So, please don't hesitate to Contact Us if you would like to discuss your requirements, naturally without obligation! Our mortgage advisors are available up to 10.00pm everyday, and we'll be delighted to provide you with an in-principle decision - whatever your circumstances! Our Freephone lines are open daily from 8am until 10pm (including the weekends!), where you'll find a warm welcome awaits you. So call us today on Freephone 08000 282 281, or alternatively why not enquire online at any time, it's both quick and simple to do, and we'd love to hear from you!

Well, that concludes our look at Stepped Rate Mortgages, we hope we've been able to answer any initial questions you may well have had. Remember there is more information throughout our website, and if you feel we can help at all in any way then we're only ever a free telephone call or couple of mouse clicks away!

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.

Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.