Mortgage Types Explained

When it comes to mortgages, most people think of a standard residential mortgage for their own home. However, there are several other types of mortgages designed to suit different situations. Knowing your options can help you make informed decisions, whether you’re moving home, investing, or planning for later life.

Below is a clear, bite-sized guide to the key mortgage types.

 

Residential and Letting mortgages

Let to Buy
A Let to Buy mortgage is used when you want to rent out your current home while buying another residential property to live in. It’s a regulated product and often suits people who moving in with a partner or relocating, but wanting to keep their existing property.

Buy to Let
Buy to Let mortgages are typically non-regulated and designed for properties you intend to rent out. This could be a new purchase or raising capital for an existing investment property. The focus here is on generating rental income or long-term investment growth.

Regulated Buy to Let
A Regulated Buy to Let mortgage applies when you plan to rent a property to a family member. Because of the personal nature of the arrangement, the loan is usually only recommended after affordability checks are complete, ensuring you can cover both your own personal outgoings and mortgage, plus the costs and mortgage of the additional property.

Consumer Buy to Let
Consumer Buy to Let mortgages are used when you unintentionally become a landlord. For example, you’ve inherited a property or you’re renting out your home because you’ve moved in with a family member or a partner. Let to Buy mortgages also fall under this category.

Limited Company Buy to Let
If a Buy to Let property is owned through a limited company, this mortgage type is used. These products are non-regulated and are generally structured for investment purposes rather than personal use i.e. a family member will not be permitted to rent the property.

 

Helping You Get on the Property Ladder

Joint Borrower / Sole Proprietor
This arrangement allows multiple people to be named on the mortgage, but not everyone owns the property. It’s commonly used to help first-time buyers, where a parent or family member supports the purchase of the home without being listed on the deeds.

 

Later Life Mortgage Lending Options

Retirement Interest Only (RIO)
A Retirement Interest Only mortgage is designed for homeowners typically aged 55 and over. You pay the interest each month, but the loan itself is repaid when you pass away or move into long-term care. Retirement Interest Only mortgages are regulated products and usually require independent legal advice.

Lifetime Mortgages (Equity Release)
Lifetime mortgages allow you to release equity from your home without making monthly repayments in most cases. Instead, interest is added to the loan over time. Like Retirement Interest Only mortgages, the loan is repaid when you pass away or move into care, and you usually need to be over 55. Only advisors with specialist Equity Release qualifications can advise on Lifetime mortgages.

Lifetime Mortgage is only applicable to those 55 and over, and it could affect eligibility to state means-tested benefits and the inheritance you may leave. To understand the features and risks, ask for a personalised illustration. Equity release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion schemes.

 

Regulated vs Non-Regulated Mortgages

A key distinction across mortgage types is whether they are regulated.

• Regulated mortgages offer consumer protection. Lenders must ensure the mortgage is suitable based on your income, outgoings, and overall circumstances.
• Non-regulated mortgages are typically used for investment purposes. It is expected the borrower understands and accepts the risks involved in the investment.

 

Additional Borrowing Options

Second Charge Mortgages
A second charge mortgage allows you to borrow additional funds against your property without changing your current mortgage. It runs alongside your existing loan and can be useful if you don’t want to remortgage or cannot access further borrowing from your lender.

These products are available for both residential and Buy to Let properties, although they often come with higher interest rates.

 

Support with mortgages

There’s no one-size-fits-all solution when it comes to mortgages. The right option depends on your personal circumstances, whether you’re buying a home, investing, or planning for the future.

At TC Mortgages, we support you in securing the right mortgage and insurance protection for your home or investment property. With access to a wide range of lenders and private banks, we can guide you through every step, from initial budgeting and mortgage applications to clear, honest advice on insurance and income protection once your purchase is complete.

If you’re considering your next move, TC Mortgages is here to help you make a confident, informed decision.

TC Mortgages

 

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.

TC Mortgages Limited, trading as TC Mortgages, is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.

TC Mortgages Limited are registered in England and Wales. Registered No: 13850240. Registered Office: 3 Acorn Business Centre Northarbour Road, Cosham, Portsmouth, United Kingdom, PO6 3TH.

Think carefully before securing any other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debts secured on it.

The Financial Conduct Authority does not regulate some forms of Buy to Lets.