What is a mortgage?

A mortgage is a loan you take out to buy property . If you change lenders but don’t move home it is called a ‘remortgage’.

Where can i get a mortgage?

You can get a mortgage direct from the lender such as banks, building societies and specialist mortgage lending companies, or you can also use a mortgage broker (A mortgage broker acts as an middle man who sells mortgage loans on behalf of individuals or businesses). You can buy based on ‘information’ only or get advice and recommendation on a mortgage that suits your particular needs.

what are my repayment choices?

There are two ways to pay your mortgage, ‘repayment’ and ‘interest only’.

• With a repayment mortgage you make monthly repayments for an agreed period (the ‘term’) until you’ve paid back the loan and the interest.
• With an interest only mortgage you make monthly repayments for an agreed period but these will only cover the interest on your loan (endowment mortgages work in this way). You’ll normally also have to pay into another savings or investment plan that’ll hopefully pay off the loan at the end of the term.

Some mortgages gives you options to vary your monthly payments, or to combine your mortgage account with savings and other income – these are called flexible, current account and ‘offset’ mortgages.

Interest rates

There are a range of interest rates to choose from. For example,

• Variable and Tracker rates

  change in line with Bank of England rates.

• Fixed rates

  are fixed for a set number of years.

• Capped rates

  have a variable interest rate with a ceiling so your payments won’t go above a set amount.

Insurance

You may require you to take out life insurance by a lender to pay off your mortgage should you die, which is known as Mortgage Protection Life cover.

You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job, which is known as Mortgage Payment Protection Insurance (MPPI).