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A simple guide to mortgages broken down into easy to digest sections.

No matter if you’re a first time buyer or a portfolio landlord – you’ve come to right place. Do you have the belief that it can be hard to get a mortgage? Thankfully, our specialist mortgage team will find you the best mortgage deals – whatever your situation. 

Throughout this website, our expert team have provided plenty of useful mortgage information that is easy to digest. It can work as a simple guide to the different types of mortgages we can help with. You’ll find lots of handy hits and tips on the mortgage process. 

More importantly, you will discover the different circumstances where our expert mortgage team help people get mortgages. As specialist mortgage advisors, we can find the right mortgage deal for you. We may still be able to help you even if you’ve been declined previously. Mortgages in complicated situations are our speciality.

Some basic information about mortgages

Firstly, let’s explain more about mortgages

A mortgage is basically a loan used to buy property (or land). A mortgage is secured against the property until the debt has been repaid in full. This means that the property or land secured against the mortgage may be at risk if you are ever unable to keep up repayments on the mortgage. You could end up defaulting on the mortgage agreement if you continuously miss mortgage payments . At this point, a mortgage provider can repossess the security property and sell it to recoup outstanding mortgage. 

What is the difference between a purchase mortgage and a remortgage? 

Quite simply, when buying a property you will use a purchase-mortgage. When you already own the property but need a new mortgage deal, this is when you remortgage.
When buying a house you use a deposit of your own money and then make up the rest of the purchase price with a mortgage if required. Unless you have the cash to buy without the need for a mortgage.  When you remortgage, you already own the property. Then it is a case of finding a new mortgage deal. The outstanding mortgage and equity make up a property’s total value.

What is equity in a house? 

In simple terms, equity is the difference between the outstanding mortgage and the full value of the property. A simple explanation would be: 
Property value: £100,000
Mortgage: £75,000
Equity: £25,000
Loan to value: 75% 

Loan to value explained

 You might have heard of the term ‘loan to value’. But what does it actually mean? The term ‘loan to value’ is referring to the size of the mortgage in relation to the value of the property. If we refer to the example above, you can see that loan to value to always stated as a percentage (%).

How long can a mortgage deal be? 

The maximum and minimum term of a mortgage will vary between mortgage providers. Your age can also effect the mortgage term. It may be possible to take a mortgage as long as 40 years depending on your age. However, many lenders will restrict the overall mortgage term to age 70. Thankfully, there are also mortgage providers that are happy for a mortgage to go until age 75, and in some cases even longer than that. 

How do I pay back a mortgage?

There are primarily two different repayment types with regards to mortgages.

  • Repayment – where the balance of the mortgage will paid off
  • Interest only – where you only pay the interest charged each month and do not actually pay off the mortgage

What is a repayment mortgage?

The goal of a repayment mortgage is to ensure the mortgage debt is repaid. Regular monthly payments that consist of ‘capital and interest’ make this happen. As you can no doubt appreciate, when you borrow money on a mortgage, interest is payable on that debt. ‘Capital and interest’ means you not only pay the interest charge, but you also pay off a chunk of the capital each month. This means that over a period of time you are able to reduce the balance of the mortgage. Eventually, so long as you maintain the monthly payments, you should be able to pay off the mortgage balance in full. 

Interest only mortgages explained 

If you consider how a repayment mortgage works, you can probably guess how an interest only mortgage works. As the name suggests, you only pay the interest charged on the mortgage debt. There is no payment to reduce the capital. As a result, the monthly payments on interest only mortgages are typically much lower. However, this also means that the mortgage balance does not reduce. Be aware, at the end of the mortgage term the balance will still need to be repaid. You may need to sell the house to pay off the mortgage if there is no other strategy to pay off the mortgage balance . 

Is it possible to overpay on a mortgage to pay it off faster? 

Most mortgage lenders will allow you to make overpayments on a mortgage. This makes it possible to repay the mortgage ahead of schedule. Typically, the maximum you can overpay each year is 10% of the mortgage balance without incurring a penalty*. Even a small regular overpayment can have a significant impact on the mortgage term.

*In order to avoid penalty charges, always check with your mortgage provider if you are allowed to make over payments.

Is it possible to get a mortgage if you have had credit problems in the past?

Yes – it is possible to get a mortgage if you have had credit problems in the past. Examples of poor credit could be missed payments, defaults, CCJs, or even bankruptcies. If you have any doubt about your credit status you should register with a credit reference website like Experian, Equifax, Clearscore, or Credit Karma. Speak to a mortgage expert if you any historical credit issues. 

What’s the easiest way to be sure you are getting the right mortgage deal for you?

You could research the mortgage market yourself. However, it would probably take a very long time to manually search each mortgage lenders details. Especially if you have a more complex situation. A specialist mortgage broker will be able to find you the right mortgage deal for you and your circumstances. Saving you a lot of time, and possibly a lot of money in the process. 

Some examples of different mortgages situations are below: 

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments