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;  

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. 

Recent posts

We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?

On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.

In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;

The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.

Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.  

The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.   

Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!

Buying your first home is very exciting but it can also be very daunting which is why we have set out a “to do list” to help you get started. 

With UK inflation remaining at 2.2% which is slightly above the Bank of England’s 2% target, the decision was made on Thursday 19th September to keep the base rate at 5%.