A mortgage is a loan taken out to pay for property. If the loan isn’t paid back the mortgage lender takes the property and sells it to repay the UK loan.
A mortgage loan consists of capital and interest. There is a wide variety of UK Mortgages available.
The type of mortgage a borrower should consider depends on their individual financial circumstances, size of deposit available, credit score and what type of buyer they are. Different types of mortgages charge interest differently.
There are fixed rate mortgages, variable interest rates are usually related to the Bank of England base rate, a capped rate, or a discount variable rate mortgage.
A repayment mortgage allows repayment of both the interest and capital borrowed.
An interest only mortgage only covers the amount of interest charged, other arrangements must be made to pay off the original capital.
An endowment mortgage is a type of interest only mortgage where the capital is repaid by an endowment policy.
How much you can borrow for UK Mortgages
How much you can borrow for UK Mortgages depends on the property value and individual income level.
A minimum deposit of 10% down is normally required but 25% down will get a better interest rate. The necessary legal work which must be completed when buying a house must be done by a retained solicitor.
It’s easy to prove your employment through your employer, if you’re self-employed it’s more difficult and a lender who specializes in lending to the self-employed will be required.
UK mortgages are traditionally for 25 years but mortgages are available for 15 or 20 years.
A mortgage should be applied for with a broker or mortgage lender.
Some fees associated with mortgages are a valuation fee, product fee, redemption fee penalty charge and a higher lending charge.
A remortgage is a refinancing of a mortgage by moving from one lender to another.