Mortgages

What is a mortgage?

A mortgage is a loan from a bank or building society that lets you buy a property. It is a secured loan, which means the bank has the right to take back and sell the property if you cannot keep up with your monthly repayments.

How do mortgages work?

Once you get a mortgage, you pay back the amount you have borrowed, plus interest, in monthly instalments over a set period, usually around 25 years. Some mortgages can have shorter or longer terms.

The mortgage is secured against your property until you have paid it off in full. This means the lender could repossess your home if you fail to repay it.

In the UK, you can get a mortgage on your own or take out a joint mortgage with one or more people.

What’s the difference between a loan and a mortgage?

A mortgage is a type of loan that’s secured against your property.

A loan is a financial agreement between two parties. A lender or creditor loans money to the borrower and the borrower agrees to repay this amount, plus interest, in a series of monthly instalments over a set term.

There are several types of loans. Some are secured, such as a mortgage, but others are unsecured. This means you do not need to use an asset as collateral. However, the amounts borrowed with unsecured loans are usually smaller with higher interest rates.

How do mortgage deposits work?

A deposit is a down payment, and it’s the amount you have to put towards the cost of the property you’re buying. The more you can put down as a deposit, the less you’ll need to borrow as a mortgage and the better the mortgage rate you’ll be offered.

A deposit is a percentage of the property's value, so if you bought a house for £200,000, a 10% deposit would come to £20,000.

Your mortgage provider will lend you the remaining 90% of the purchase price.

This is what is known as the Loan-to-Value (LTV).

It measures the percentage of the property price that you will need to borrow to make the purchase.

In the above example, a 90% LTV mortgage would cover the remaining £180,000, which would be the amount you owe your lender.

A 95% mortgage would mean you would put down a 5% deposit – or £10,000, meaning you would borrow a mortgage of £190,000 in the above example.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Whether you’re a first time buyer, an investor, you’re moving house or you’re looking to re-mortgage, we can help you decide which mortgage is right for you.

We use our experience and knowledge to help select a product most suitable to your current and future needs. It can be both an exciting and daunting decision however we’re here to make it as effortless as possible and most importantly, to give you unbiased advice you can trust.