Read the most frequently asked questions about mortgages; see the answers, compare rates and find the best deal to suit you.
What is a mortgage?
A mortgage makes it possible for you to purchase a property as the loan or ‘mortgage’ is secured against it. You can read more in our beginners’ guide to mortgages.
Where can I obtain a mortgage from?
You need to obtain funding from a bank or other financial institution, such as a credit union, building society or specialist mortgage lender; the lender will then add interest to the amount you borrow.
What does a repayment mortgage mean?
As a borrower, you repay the loan back per month over a fixed agreed term until the capital and the interest are repaid. This type of mortgage is the most common and the length of the term usually ranges between 20 and 30 years in the UK.
How does this differ from an interest-only mortgage?
With this type of mortgage as a borrower, you repay the interest on the loan, over a fixed period. You are expected to put in place saving or investment plans to ensure you have the funds remaining to pay off the capital. Interest-only mortgages are not so popular now.
What are the various types of mortgage on offer?
There is a range of different mortgage options with various features to choose from:
- Fixed interest rate mortgages
- Tracker rate mortgages
- Standard variable rate mortgages
- Cashback mortgages
You may want to consider changing your mortgage provider when your deal comes to an end or re-mortgage with the same provider to save you money on your repayment.
How much am I able to borrow?
Lenders take into account a number of factors:
- Main income
- Income from a second job
- Extra income from bonuses, tax credits, maintenance payments
You can enter any of these details into our online quote calculator to see how much you can borrow, together with the cost of monthly repayment fees.
How much deposit should I put down to secure a loan?
The answer to this depends on your lender and on your financial circumstances. It is extremely rare nowadays for a lender to loan 100% of the property value. However, see low-deposit mortgage options to see if a 95% mortgage may be possible.
Should I re-mortgage?
Remortgaging can often support you to raise funds or could mean you get onto a better deal. You can re-mortgage through your existing provider or transfer to a new one. However, be aware of any penalty fees on early exit.
What if I fail to make the repayments?
Your home could be at risk if you don’t keep up with the repayments. If you find yourself in financial difficulty, speak with your lender as soon as possible. They should be able to provide you with options until you are financially stable again.
What sort of insurance cover do I need when taking out a mortgage?
A mortgage lender will insist that you have appropriate buildings insurance cover; some providers may ask for life insurance cover or mortgage indemnity insurance; it is a good idea also to look at options for income protection.
You can go to any insurance company for protection and you may find a different provider offers you a better deal so shop around and get quotes.
Find out more here: mortgages and insurance.
What is mortgage protection insurance?
Mortgage protection insurance offers a safety net if you should fall ill or be made redundant; it offers income protection so that you can keep up your mortgage payments.
Where can I obtain more information?
See our designated mortgage guides. These may answer any further questions you have. If you prefer to speak with a mortgage expert, our partners at London & Country have staff on hand seven days a week. Call them on 0800 073 1959,[1] or request a free call back.
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