Mortgages: where do I begin?

Applying for a mortgage requires careful research and planning. You’ll need to understand the different types of mortgage loans available, how much deposit to put down and whether your credit rating is good enough to support an application.

Obtaining professional assistance helps you access the best mortgage deals. It can also prevent you from taking on repayments that are too high, an issue that puts your home at risk of repossession.

Finding the right mortgage

There are two main types of mortgage:

  • Fixed rate – the interest rate is fixed for a pre-determined length of time, usually between 1-5 years. A fixed-rate mortgage can be a good option if you need to be certain of your monthly repayment amount. It does typically tie an individual into the deal rate period, therefore, if interest rates do fall, you continue to pay the fixed rate. If you wanted to take advantage of falling interest rates, you would face an early repayment charge.
  • Variable rate – the rate of interest varies according to the Bank of England Base Rate and the rates offered by your mortgage provider. Depending on this, your monthly repayment amount could change. There are different types of variable rate options, including ‘trackers’, discounted rate and standard variable rate mortgages.

If you’re a first-time buyer, you may be able to take advantage of one of the government schemes designed to help you onto the property ladder.

Schemes for first time home buyers

Help to Buy is one of the few government initiatives designed to help first time home buyers. There are a number of options available under the Help to Buy scheme, you can find out more about it here.

A guarantor mortgage may also be an option. This involves a third party, usually a parent, who takes legal responsibility for repayments if you default. Although you will still need to consider how much to borrow.

Applying for a mortgage – how much can I borrow?

When you apply for a mortgage, the lender will carry out checks on various aspects of your financial life, including:

  • Your credit file
  • How much you earn
  • Your regular expenditure
  • Whether you owe any debt

Each financial institution has its own lending criteria, but the main basis for calculating how much money you can borrow is your income and expenditure. The information in your credit file is also used to judge the lender’s level of risk.

It’s a good idea to obtain a mortgage approval in principle, once the lender has carried out an initial assessment of your finances. This will speed up the buying process when you find a property that you like and presents you as a safer option for sellers.

Remortgaging your home

Sometimes a remortgage can be a good idea if you need to raise capital, or to secure a better deal with a new mortgage. However, you should check the terms of your existing mortgage for an early repayment charge, as this might affect whether remortgaging is worthwhile.

If you would like to find out more about obtaining a mortgage, whether you’re a first-time buyer or looking to find a better deal, we can provide the professional guidance you need. Find out more about mortgages here, and get in touch with us to discuss your options.

Protecting your home

It's important to consider protection when taking out your mortgage, as this could provide financial stability should your circumstances change. However, it’s also important to remember that taking out a protection plan will not necessarily prevent repossession of your home. To learn more, visit our protection planning section here, and call us to speak to an independent financial adviser.

Your mortgage is a loan secured against your property. Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.


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