Mortgages

Morgages come in all shapes and sizes so it's important to find the right one to suit you.

How do mortgages work?

A mortgage is a long‑term loan used to buy a residential property or piece of land. Your lender — usually a bank or building society — loans you the money based on the value of the home, and you repay it through monthly instalments, typically over 25 to 35 years. If you’re unable to keep up with repayments, the lender has the legal right to repossess the property.

When buying a home, you’ll usually start by paying a deposit, which is a percentage of the property’s purchase price (commonly 10%–20%, though some products start from 5%). The remaining balance is covered by your mortgage.

Once your deposit is paid and your mortgage is in place, you become the legal homeowner and continue making monthly mortgage repayments until the loan is fully paid off. When your mortgage term ends, you own your home 100% outright.

How can I boost my chances of getting a mortgage?

Improving your chances of getting a mortgage starts with showing lenders that you’re a reliable and financially responsible borrower. The stronger your financial profile, the more likely you are to be approved — and access better mortgage rates. Here are some of the best ways to boost your mortgage eligibility:
  • Improve your credit score
  • Consider using a guarantor
  • Make sure you’re on the electoral roll
  • Pay off debts and close unused accounts
  • Save the biggest deposit you can 
  • Prepare your documents easly

Explore the different types of mortgages...

Fixed Rate Mortgages
Standard Variable Mortgages
Discounted Mortgages
Tracker Mortgages
Capped Rate Mortgages
Flexible Mortgages

FIXED RATE MORTGAGES


Rest in the knowledge that your monthly payments will stay the same for a fixed amount of time.
 
  • The interest you’re charged stays the same for a fixed period. 
  • A fixed rate mortgage is great if you want the stability of a fixed monthly payment.
  • If interest rates fall, you won’t benefit at all because you’re locked into your fixed rate. 
  • Make sure you check the length of your fixed rate deal and make sure you’re happy to be locked in for that period of time.

STANDARD VARIABLE RATE MORTGAGES


If you opt for a SVR, you can leave at any time. Also, you can overpay your monthly payments.
 
  • A standard variable rate mortgage (SVR) will last as long as your mortgage deal.
  • If your mortgage lender sets a low interest rate, then you could essentially be on a better mortgage rate than someone who opts for a fixed rate. 
  • If you opt for a SVR, you can leave at any time. Also, you can overpay your monthly payments.
  • To prepare for any increase in monthly payments, it’s wise to have some savings at the ready

DISCOUNTED RATE MORTGAGES


This mortgage type is a discount off the lender’s standard variable rate. It only applies for a certain length of time, usually 2 or 3 years.
 
  • Your rate will start off cheaper which will in turn make your monthly repayments smaller.
  • Also, if your lender lowers their SVR, you’ll pay less each month!
  • Check the interest rate as well as the discount rate.

TRACKER MORTGAGES 


A tracker mortgage moves in line with another interest rate (usually the Bank of England’s base rate, then adding a fixed amount on top).
 
  • Usually there last between 2 to 5 years
  • If the rate tracking goes down, so will your repayments. 
  • Your lenders SVR doesn’t affect your monthly payments, it’s just the base rate you’re tracking (ie the Bank of England).
  • Be sure to check the length of your mortgage deal as some lenders will charge an early repayment charge

CAPPED RATE MORTGAGES


A capped rate mortgage moves in line with the lenders SVR, but with a cap on how high the interest rate can rise. 
 
  • If your lenders SVR decreases, so will your repayments. 
  • Your rate won’t rise above a certain level, so you know you won’t pay over a certain amount each month.
  • Make sure you’re aware of how high the cap can rise.
  • Also, if you opt for this mortgage type, be sure you can afford the highest rate by saving in advance.

FLEXIBLE MORTAGES

Flexible Mortgages let you overpay and underpay, take payment holidays and make lump-sum withdrawals. 

  • If you get a promotion and want to increase your monthly payments, you can do.
  • If you receive a lump sum, you can pay this towards your mortgage easily.
  • If you can’t pay your usual amount and you’d like to decrease a months payment, you can.
  • If you’re self employed and have a fluctuating income, a flexible mortgage is ideal.
  • Double check if there is a limit to the amount you can overpay.
What is a mortgage?
A mortgage is a loan taken out to buy a residential property or land. A bank or building society provides a loan against the value of your home until it’s paid off. Most buyers pay monthly repayments to the lender for around 25 - 35 years to pay off their mortgage. If you can’t keep up your repayments, the lender can repossess (take back) the property.
How does a mortgage work?
When you buy a home, you’ll typically put down your deposit. This is a percentage of the property’s total purchase price (usually between 10% and 20%). You then pay the remaining cost of your home with a mortgage. You legally own your own home and make monthly repayments on the mortgage until eventually, you have paid off your mortgage and own the home 100% outright.
How much deposit do you need for a mortgage?
To buy a new home, you’ll need to pay a deposit. This is a lump sum of money that goes towards the cost of the property you’re buying. The remaining cost of the property is taken out as a mortgage, which you’re charged interest on. The bigger the deposit you pay, the lower your interest rate could be.
How will I know how much I can afford?
When the lender is assessing how much they’re willing to lend you, they will take into account the following: your income, your outgoing and any future changes. It’s important to seek advice from a mortgage advisor. This will give you chance to fully analyse your finances and their professional advise will mean you can decide on the best type of mortgage for you, how much you can repay each month and find the best mortgage rates.
How long does it take to pay off a mortgage?
This is dependent on the terms and conditions of the mortgage you take out. Lenders usually take 25 years, however, some lenders will offer up to 40 years to pay off your mortgage.
Where do I get a mortgage?
You can apply for a mortgage from a bank or building society. At this point, it’s advised that you seek professional advise from a financial advisor. Using a financial advisor means they can compare the different types of mortgages on the market and advise which ones are best suited to you. They will be able to compare the different mortgage rates on the market and match the best one to you and your current situation.