There are three main types of mortgages - repayment, endowment and interest only.

Repayment Mortgage
You make a regular monthly payment, which is used to pay the outstanding interest and a proportion of the capital. During the early years, most of your payments are needed to meet the interest due, but, as the loan reduces, you pay off progressively more and more of the outstanding capital. By the end of the mortgage term the loan will have been fully repaid.
To ensure that the mortgage would be repaid in the event of death or critical illness, a Mortgage Protection Life Assurance policy is usually the most appropriate type of cover.

Interest Only Mortgage
This is a special type of mortgage for people who know and can show that they will be able to pay off the whole mortgage outright in a few years time, because they will be receiving a cash sum from another source. As an example, this could be a cash lump sum from a pension scheme. Only interest on the loan is repaid during the term, with the full amount borrowed remaining outstanding until you pay it off.

Endowment Mortgage
This is a way of combining mortgage repayment with savings, through a life assurance policy. You pay interest on your loan throughout the mortgage term. You also pay monthly premiums to a Low Cost Endowment policy, which automatically includes sufficient life assurance to pay off your loan, in the event your death. Critical illness and permanent health insurance cover can also be included in this type of plan. By the end of the mortgage term, the aim is for the value of the policy to have grown sufficiently to repay the mortgage, however this is not guaranteed, therefore this type of mortgage is not suited to the person who wants peace of mind knowing that the mortgage will be paid at the end of the term. This endowment mortgage is particularly tax efficient on the Isle of Man as at present, tax relief may be obtained on all of the mortgage premium and on 50% of the endowment premium.

Isle of Man Mortgages
The Mortgage Market on the Isle of Man is vastly different to its counterpart in the UK. Many people think that it is possible to contact a UK based Provider for a Manx Mortgage this is especially true with the advent of the Internet. However, the Isle of Man Mortgage Market is limited to the Financial Institutions that provide, for the local market.

On a positive note, the mortgages available here are compatible to UK mortgages. Also, some lenders disregard income multiples when underwriting an application, instead they base there lending criteria on affordability. This is due to the lower tax paid on the Island and people usually have a higher disposable income.

The following Financial Institutions provide Mortgages on the Isle of Man.

Abbey National
Barclays Bank
Isle of Man Bank
Irish Permanent
Halifax International
Royal Bank of Scotland
HSBC
Lloyds TSB
Natwest
Britannia Building Society
Bank of Scotland
Northern Bank

The option available to anyone contemplating a mortgage is daunting. Who to choose and what type of mortgage to go for can take a lot of effort and time. This is where an Independent Mortgage Broker, such as Carrick Financial Services can help. We are ideally placed to advise on the full range of mortgages available and offer a complete mortgage sourcing service. We also provide a professional mortgage report especially helpful to first time buyers and anyone thinking of re mortgaging.

Types of Mortgages Available

Fixed Rate
The interest charged on the mortgage is for a set amount for an agreed period of months or years. This type of mortgage normally has a booking fee, which needs to be paid upfront. There is always a redemption penalty if some or all of the capital is repaid during the fixed term, however, some fixed rates lock the borrower into a variable rate for an extended period of time.

Discounted
This type of mortgage is sometimes available within a flexible mortgage. The lender agrees to give a discount off the rate payable for a set period of time, however, this moves in line with either the variable rate or the Bank of England's Base Rate.

Capped Rate
An interest rate charged for a set period of months or years which can go up and down with the variable rate, but there is a maximum (capped) interest rate which it cannot go above.

Cash back
The lender agrees to pay the borrower a set amount, this may be fixed or a percentage of the amount of the mortgage, once the mortgage has been drawn down. This type of mortgage normally has a booking fee, which needs to be paid upfront. There is always a redemption penalty if some or all of the capital is repaid during a pre set number of years.

Flexible
Extra payments can be made without incurring redemption penalties. Interest is normally charged on a daily bases and is usually linked to the Bank of England’s Base Rate. These are sometimes known as Base Rate Tracker Mortgages. The rate payable on these tends to range from 0.5% to 1.00% above the BOE Base Rate.

Insurance
For most people the repayment mortgage method will be preferred, however, there will still be a need for other related insurance products. These will include.
Building Insurance The lender will require the building to be insured before the completion of the mortgage, the sum assured will be recommended by the valuer and is based on local rebuilding costs and other related costs. Contents insurance is not compulsory however is strongly recommended.
Mortgage Protection Most lenders will require life protection on the mortgage before completion, cover protecting the mortgage in the event of the diagnosis of a serious illness should also be considered but is not compulsory.
Mortgage Payment Protection In recent years the government has reduced the mortgage benefit payable in the event of sickness, accident or unemployment. To ensure that the mortgage payments are covered, it is necessary to have some sort of cover place. Many people have some limited cover at work, however this would need to be reviewed by a qualified adviser. Today’s MPP products cover from day one and also include cover against involuntary unemployment.

Summary
Moving home or buying your first property can be a daunting prospect and ensuring"Best Advice" for the mortgage and any related insurance products is most important.
The above is only a rough guide on Manx Mortgages, and even a quick chat with a qualified financial planner could save a lot of money. It is also important to ensure that you speak to a suitably qualified adviser who is independent of all mortgage lenders and insurance companies.