What Is A Mortgage And How Does It Work?
Unless you have enough money in the bank to purchase a property outright, it is likely that you would need a mortgage when you’re buying a new home. The vast majority of people have a mortgage, whether they own a one-bedroom flat or a five-bedroom house, and they are an incredibly common loan. If you’re still trying to get to grips with what a mortgage is, below we have covered all of the basics you need to know before buying a property.
What is a mortgage?
Simply put, a mortgage is a loan that is secured upon a property. When you’re looking to purchase a property, a mortgage provider would lend you the money you need to buy your new home and you then pay this money back to them over a predetermined period of time.
Due to the fact that the loan is ‘secured’ by the property, if you don’t keep up with your mortgage payments, the mortgage lender may be able to repossess your home. However, as long as you continue to repay the loan, you won’t have anything to worry about in this regard.
How long do you have to pay back a mortgage?
There isn’t a ‘one-size-fits-all’ answer to this question and mortgages can be repaid over varying amounts of time. Commonly, mortgage terms are anywhere between 15 years to 30 years and you have some control over how long you would like to pay back your mortgage. There are lots of different factors to consider when deciding on a mortgage term and it is important to carefully think about how quickly you want to / you could realistically pay back your mortgage.
What types of mortgages are available?
Many people don’t realise just how many different mortgage products there are out there and there are a number of mortgage types available to consider. Some of the most frequently required mortgages include;
- Residential mortgages - for when you’re purchasing a property to live in yourself
- Buy to let mortgages - for when you’re purchasing a property specifically to let
- Shared ownership mortgages - for when you only purchase part of a property
- Self-employed mortgages - for when you’re purchasing a property without being contractually employed
Regardless of your individual circumstances and requirements, there tends to be a suitable mortgage for almost everyone these days.
How much can you borrow from a mortgage provider?
When deciding how much they’re willing to lend you, a mortgage provider would look at several things, such as; your job, your income, your age and your credit score. They take all of these different factors into consideration, along with the Loan to Value Ratio you’re interested in, before deciding whether they’re willing to offer you the loan and what the terms of the loan will be.
It is always recommended that you get a Mortgage in Principle when buying a new home, this gives you a much better idea of how much you could afford before you start looking at properties for sale.
How do you get a mortgage?
Contrary to popular belief, applying for a mortgage doesn’t have to be a complicated process. When you enlist the help of a mortgage broker, getting a suitable mortgage with competitive terms couldn’t be easier. There are hundreds of mortgage lenders out there and a mortgage broker can help you find the right one for you.
Even when working with a mortgage broker, there are a few things you need to apply for a mortgage, including;
- Proof of ID
- Proof of address
- Proof of income
- Proof of cash deposit
Lenders are becoming more demanding in this regard in an attempt to reduce risk, so ensure you have everything they’re likely to need when seeking mortgage advice from a broker.
Speaking to a mortgage broker in Maidenhead
If you’re searching for a mortgage broker in Maidenhead to assist you when buying a new home, don’t hesitate to contact our team here at Mortgage Required. We can provide you with the honest and sound advice you need, and we have assisted customers from all walks of life to get a mortgage. We can help you to compare and contrast the different options on the market before you commit to an application and with many years of experience behind us, you can trust that we will provide you with the whole of market, professional and friendly service you’re looking for.
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