Mortgages, simply explained
A mortgage is a type of loan used to buy property. Most mortgages run for around 25 years, although they can be shorter or longer depending on your needs. The amount you borrow is known as the capital and interest is charged on it by the lender until the debt is repaid. This loan is secured against the property’s value. Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.
Our advisers are here to help you find the mortgage that’s right for you
Repayment mortgages
You agree to borrow a set amount and pay it back monthly over the number of years that suits you. These monthly payments include both the borrowed amount and the interest. Finding the most suitable deal on your own can involve a lot of research and repeatedly explaining your situation to different lenders. We work with lenders to find the mortgage that matches your needs. We could also improve your chances of being accepted for a mortgage, knowing which lenders are most appropriate for your circumstances.
Interest-only mortgages
Your monthly payments are lower compared to a repayment mortgage because you’re only paying interest and no capital. However, since the original loan amount doesn’t decrease, the total cost over time ends up higher. These mortgages tend to have stricter eligibility criteria, are less commonly offered and require you to show how you’ll repay the capital as a lump sum. Having a mortgage adviser by your side can help you navigate the complexities.
Fixed or variable rates?
A variable rate mortgage means the interest you pay can go up or down, as it tracks the Bank of England’s (BoE) Bank Rate. A fixed-rate mortgage, by contrast, locks in your repayment amount for a set time — or the entire term — so you pay the same each month. You won’t benefit if rates drop, but you’re also protected from increases. Each option has its advantages and drawbacks. We can help you decide which type is most suitable based on your situation and the current market outlook.
There are other types of mortgages available too, like buy-to-let and tracker mortgages, depending on your needs, and a financial adviser could help you with these.