Mortgages
How Mortgages Work?
- A mortgage is a loan you take out with a lender for a number of years
- The length of time over which you have a mortgage is called your “mortgage term”
- Mortgage terms can be anywhere between 5 and 40 years
- A mortgage is a type of secured loan, which means it’s secured against a property – usually the property you want to buy with the mortgage
- Using a property as security for a loan means that the lender can repossess it if you don’t keep up the mortgage payments
- To take out mortgage, you must put down a mortgage deposit of at least 5% of the purchase price – the mortgage itself makes up the rest
What about interest rates?
- In most cases, you pay back your mortgage with interest
- A popular kind of interest rate for the first-time buyer mortgages is a fixed rate, which is where interest is charged at a set rate for a certain period. Fixed rates are particularly good for those who like to budget
- After the introductory period ends, you’re transferred onto your lender’s SVR (standard variable rate), which is the interest rate they set themselves
- The lender’s SVR is normally higher than the introductory rate, so you would often remortgage onto a new product with a new lender when your introductory deal ends or take a new product with your existing lender
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Your Home May Be Repossessed If You Do Not Keep Up Repayments On Your Mortgage
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