A mortgage is a term for a loan that helps you buy a home. Property is expensive, unfortunately, and few of us have hundreds of thousands of pounds lying around. This is where lenders come into play.
You’ll need a few things before you approach a lender though, and the biggest thing here is a deposit.
A deposit is a portion of the value of the property you want to buy. It tells the lender that you’re a reliable buyer and can at least afford to put some money aside each month. You will need at least 5%, but usually, the bigger your deposit, the better.
Once you have a deposit and the lender can prove that you can afford the property, you’ll go through the ins and outs of getting a mortgage that suits your needs. To do this, there are a few things you need to know.
Mortgage interest rates
Lenders aren’t just going to give you a bunch of cash and not want anything in return. Remember, they’re a business, and this must be an investment for them too.
The interest rate you get given will determine how much extra you pay on top of the initial amount you borrowed. In the UK, these can be fixed or variable, depending on the type you choose.
A fixed rate mortgage means your interest stays the same for a set period. It’s a stable choice, but if interest goes down with changes in the bank rate, you could miss out on lower rates. On the flip side, variable rates could change, and you may not want the uncertainty of changing monthly payments.
Mortgage terms
This will be the amount of time you choose to pay off your loan. Unlike a car loan, it’s unlikely to be a low number, as it’s a significant amount of money. That being said, if you can afford it, and your adviser and lender are on board, you can choose for a shorter term with bigger monthly payments.
The most common mortgage period is 25 years1, but you can find a mortgage length that suits you.
Working with an expert
Working with a mortgage adviser can be a game-changer. They know the ins and outs of the mortgage market and can help you find solutions that work for your unique situation. Whether you’re buying for the first time or a seasoned homeowner, having an expert on your side is like having a more experienced co-pilot flying beside you.
Get in touch with us to find out how we can help.
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Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
Download the Mortgage Advice Bureau app
Our app is a digital mortgage coach designed to help you save up, plan, and track your home buying journey – whether you’re buying your first home, or just fancy a move.
We’ll guide you through step by step to ensure you always know what’s coming up next.
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