Jason Bailey

Expertly compared by Jason Bailey

Products Updated October 12, 2021

 

Compare Stepped Rate Mortgages

If you are looking for a stepped rate mortgage then our experts can help. We have quickly found and compared all the stepped rate mortgage deals from the whole market place. See how the interest rates, fees and charges compare across the entire market. Use the mortgage tools to find your perfect mortgage.

 

Free mortgage advice and brokerage service. Our experts can find you the perfect deal from thousands of products & exclusive deals:

Your home may be repossessed if you do not keep up repayments on your mortgage.

Results:1 providers expertly compared:

Lending Expert

Why?

This provider is our Expert’s Choice in its category as it won tops marks for the following.

  • TRUST
  • VALUE
  • EXPERTISE & KNOWLEDGE
  • CUSTOMER SERVICE

Learn more about how we review and assess the providers here on Lending Expert.

LTV
60% - 100%

Initial Rate
1.19% - 4.32%

Standard Rate (SVR)
3.94% - 4.79%

APRC
3.6%

Type
Variable & 3 ,5 & 10 Fixed Rate

Rated 4.9/ 5

All credit types

The mortgage experts at First Choice Finance can quickly assess your requirements and search the market place to find you the perfect mortgage deal. Click get a quote to make an enquiry today.

Read our customer and visitor reviews for this product:

Rating: 4 / 5 with 2 votes

Simple application process

by K Wheeler

Simple application process - broker was kind and offered advice.

Quick search

by James Hilton

This is a quick mortgage search facility and shows many lenders across the market. Impressed with the level of detail on each product.

Start Your Stepped Rate Mortgage Application Today With Lending Expert!

Stepped rate mortgages are a certain type of adjustable-rate home loan allowing for increased interest rates after a given time period during the overall loan term.

A common type of stepped rate mortgage is a two-step mortgage. This type of loan involves starting the loan at one given interest rate and then adjusting that rate after an agreed time period to a rate which is consistent with the loan market and could be much higher.

Typically, banks will offer stepped rate mortgage loans if they are certain that interest loans will increase in the future. Borrowers, on the other hand, take on stepped rate mortgages if they believe that they will be able to refinance their loan before the interest rate rockets.

Lending Expert is a stepped rate mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks can offer stepped rate mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for repayment, fixed, variable, stepped rate or have a bad credit history.

Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best stepped rate mortgage according to your requirements. 

 

Key Features

  • Fixed period of stepped-rate interest
  • Combined monthly payments (interest and capital)
  • Rates from 1.39% per month
  • Borrow up to £2 million
  • No minimum income requirement
  • Interest-only, fixed, stepped rate mortgages available
  • No product / arrangement fee
  • Capital repayments allowed annually without early repayment charge
  • Free tool to compare stepped rate mortgages

 

What Is a Stepped Rate Mortgage?

A stepped rate mortgage offers an initial interest rate for a fixed period, the duration of which is agreed between borrower and lender. Typically this period is between five to seven years. After this period, the interest rate will adjust to a higher rate. 

Stepped rate mortgages always have an introductory rate and the higher rate afterwards. 

These mortgages can be favourable for those looking to flip properties or construct their own home as it allows them a period of lower monthly payments during the construction or renovation phase in the initial years. 

Stepped rate mortgages are also a method of attracting a broader pool of buyers as many of these borrowers could not qualify or afford a traditional loan.

 

How Much Is a Typical Stepped Rate Mortgage?

Stepped rate mortgages are unlike fixed-rate mortgages in that you will not be paying the same amount per month throughout the duration of the mortgage deal. 

Typically, stepped rate mortgages can initially work out as cheaper than a standard variable rate (SVR) for the introductory fixed period but after this period they will increase and be higher than benchmark rates.

To work out exactly how much your stepped rate mortgage would cost, use our calculator or speak to one of our team at Lending Expert today.

 

What Areas of the UK Does Lending Expert Cover as a Stepped Rate Mortgage Broker?

We proudly offer stepped rate mortgages across the entire UK, Scotland and Wales including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.

 

How Much Can I Borrow From a Stepped Rate Mortgage?

Speak to an expert today in order to find out how much you can borrow from a stepped rate mortgage.

 

Can I Get a Stepped Rate Mortgage?

  • Aged 25 to 85 years’ old
  • No minimum income
  • Minimum deposit 25% of overall property value
  • Good credit status 
  • Strong financial record (limited defaults, arrears)

 

Stepped rate mortgages can often have less strict lending criteria for borrowers but exact eligibility criteria will vary from lender to lender.

These types of loans can be available both for first-time and experienced landlords, regardless of age or years of experience. No minimum annual income is required; although, applicants should ideally already be a homeowner.

 

 

What Other Factors May Impact Eligibility for a Stepped Rate Mortgage?

Many different factors could impact your eligibility to secure a stepped rate mortgage. 

These include, but are not limited to, the following:

  • Credit score (this can affect the agreed interest rate)
  • Debt-to-income ratio
  • Home location
  • Deposit amount
  • Equity
  • Home price and loan amount
  • Work history

 

Is a Stepped Rate Mortgage the Best Option for You?

Stepped rate loans can be a great option for those who are purchasing investment properties or looking to undergo construction as they permit lower payments for the borrower during the construction period. After the work is completed, the introductory period of the loan will end and interest rates will adjust and increase. Thus, this scheme can be a big help for landlords who are uncertain of whether their properties will immediately generate income as it allows a buffer period.

Another consumer profile who benefits from stepped-rate mortgages are those borrowers who want to benefit from a lower-than-market interest rate and lower monthly payment over the initial few years of the loan. This could be first-time buyers or younger borrowers who expect to earn more in the future. 

Additionally, these types of loans can be good for homeowners who are looking to sell their property before the end of the introductory period. 

For lenders, this type of loan can be beneficial because they open a new pool of potential borrowers who may otherwise not qualify for a traditional loan. These borrowers are able to absorb the market risk of the rising interest rates. When the introductory rate period ends, the mortgage plan will move onto a higher repayment plan – this is a more profitable deal ofr the lender.

 

What Is the Difference Between Adjustable-Rate Mortgages and Stepped Rate Mortgages?

Stepped rate loans are different from adjustable-rate mortgages (ARMs) as they will only readjust a loan’s interest rate once (hence sometimes receiving the name two-step loans). ARMs, on the other hand, will readjust multiple times throughout the loan term.

The one readjustment of a stepped-rated loan’s interest rate will switch from the introductory interest rate (typically 5-7 years) to the higher interest rate which, at this point, will be fixed for the rest of the loan term (the standard duration being 25 years). Alternatively, ARMs can readjust borrower interest rate many times over the course of the loan and there is a greater deal of variability. 

 

Stepped Rate Mortgage Providers

There are many lenders on the market who offer competitive rates for stepped rate mortgages.

At Lending Expert, we compare the stepped rate mortgage market in order to find the best provider to suit your needs and the most suitable type of mortgage.

Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.

 

How Do I Compare Stepped Rate Mortgage Rates?

Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.

Contact us today to speak to an expert and start comparing stepped rate mortgages to find the best option for you.

 

What To Consider Before Getting a Stepped Rate Mortgage

Prospective buyers should always consider the following factors before deciding to take out a stepped rate mortgage:

  • Annual income
  • Credit score
  • Current interest rate according to the Bank of England
  • Amount you are able to put down as a deposit
  • How much you want to borrow overall
  • How much equity you have 
  • Whether you are looking to buy with someone else
  • Job stability 
  • Purpose of the mortgage (e.g. first-time buyers, investment property)

 

What Happens if I Do Not Keep Up With Repayments?

Your stepped rate mortgage is secured against the property meaning that any late repayments will lead to a damaged credit score, late penalties and maybe even risk of property repossession from the lender. 

 

Why Use Lending Expert As Your Stepped Rate Mortgage Broker?

Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.

Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation. 

Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!