A mortgage will help you buy the home of your dreams . Here is a mortgage guide for everything you need to know to find the right one for you.
A mortgage is a loan from a bank or building society to help you buy your new home. You pay back the amount you have borrowed plus interest over a period of time, usually 25 or more years. The term can be less than 25 years but this can result in higher repayments.
The mortgage is secured against your property until you have paid it off in full. This means the bank could repossess your home if you fail to make your repayments.
You can apply for a mortgage either on your own or one or more people.
Most mortgages are on repayment. This means your monthly payments will go towards both the interest charged on your mortgage and clearing the outstanding balance left to pay. By the end of the mortgage term you will have paid off the full amount you borrowed including all interest charged.
Interest only mortgages are monthly repayments that only cover the interest owed. Your outstanding balance will not go down. At the end of the term you will need to pay off the full outstanding balance, so you will need to have saved up this amount separately or may have to sell the home to repay the amount borrowed.
The amount you have to pay each month depends on the mortgage deal you get and the cost of the property. Here are the costs of a mortgage briefly explained:
Once you have your mortgage, missing repayments will usually mean you will be charged a fee by your lender, pushing up the total amount you owe.
You will have to pay for part of the property upfront yourself, and this is called the deposit. You usually have to save this up yourself or it be gifted to you by a family member. You can not borrow a deposit.
It is shown as a percentage of the property's value, so if you bought a house for £250,000, a 10% deposit would come to £25,000.
Your mortgage lender will loan you the rest, which is called the loan to value (LTV). In the above example a 90% LTV mortgage would cover the remaining £225,000, which would be the amount you owe your mortgage provider.
There are lots different types of mortgages. Below are just a few but there are many more so its worth speaking to a mortgage advisor about your personal circumstances.
Whats the difference?