How To Get A Mortgage - A Guide
What is a mortgage?
You've spend months looking around for property and have finally found the most suitable one for you. But how can you afford to pay for it? A mortgage is a sum of money loaned by a provider such as a bank, building society or specialist lender to buy a property. The loan, as well as any interest accrued, is then paid back to the lender over a certain period of time. There are thousands of different mortgage deals on the market, each offering different terms, conditions and mortgage rates. Unless you are clued up on the mortgage market, it may be of use to seek independent mortgage advice to guide you through the process.
Before you buy
Know your budget - What house can you realistically afford? How much can you afford to borrow? How much can your salary, or your partners, afford to pay off each month? Ask yourself these questions. An impartial mortgage advisor will ask them also.
How much deposit can you lay down? Mortgage lenders now want to see an initial lump sum paid towards the deposit of the house. This can be anywhere between 5% and up to however much deposit of the overall property value you can afford. In the current economic climate there are few deals available to those who have a small deposit of 5-10% to secure their mortgage. For the best and greatest number of mortgage deals, you may need a deposit of up to 40% of the property value.
Know the two types of mortgage
Repayment Mortgages - The traditional and simplest way of repayment. Every month you will pay off a fixed amount to your lender. This will cover the cost of the mortgage and the interest which your provider charges. In layman's terms, month by month you will be paying off a small amount of your mortgage.
Interest Only - Exactly what the title infers. You will only pay off the interest part of your mortgage without paying off the actual main part of the mortgage. This makes your repayments smaller than a typical Repayment Mortgage.
Getting a mortgage through a broker or direct?
Mortgages are available and purchased either directly from the mortgage lender such as banks and building societies, or from mortgage brokers. These different vehicles of buying a mortgages will often offer varying special deals.
Deals offered directly through the mortgage lender can be offered via telephone, online and in store. Of course, these special deals may not be available through brokers but they will only tell you about their products and deals.
Alternatively, independent mortgage brokers have access to the whole market and a wide number of deals. Mortgage brokers are often given exclusive deals not available through any other method. The benefit of a broker is that they can also offer you impartial advice accompanying their deals.
Shop around
Whether searching for a mortgage directly through the lender or through a broker, it will always pay to shop around for the best mortgage deals and rates. Doing so could save you a lot of money in the long term. Each individual mortgage you look at should have a 'keyfacts' document containing the essential information regarding the specifics of that particular mortgage and the rates it will work on. These 'keyfacts' sheets make it easier to compare and contrast each mortgage against each other.
There are thousands of mortgage options available and searching thoroughly could become a time intensive process. Our partners at London and Country Mortgages offer mortgages from across the whole market, saving you time and possibly money.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
This no-fee, whole of market mortgage advice service is provided by London & Country Mortgages Ltd. Registered Address: Beazer House, Lower Bristol Road, Bath, BA2 3BA. Registered in England, number: 01988608. London & Country Mortgages Ltd are authorised and regulated by the Financial Services Authority. Their FSA number is 143002.
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