Mortgages are one of the most common and widely used financial products in the UK. Everyone at some point will require a mortgage if they hope to purchase their own home either now or in the future. The mortgage market has decreased in recent years following the credit crunch and there is now less choice of lenders and mortgage products than there were in the mid 2000’s for example. The mortgage market however is now on the increase with more lenders, products and rates becoming available over the past 12 months.
Who can get a mortgage?
Mortgages are available to those who are aged 18 or older. The amount you are able to borrow will depend on how much income you earn (affordability) and how much you have raised as a deposit. Almost all lenders require the borrower to put down a deposit of 5% or more of the properties value. Generally speaking the greater value of your deposit then the cheaper your mortgage rate will be due to the greater security for the lender. Mortgages are secured against the property that you buy as what is known as a first charge.
What types of mortgages are there?
There is a range of different mortgage types to suit all circumstances and requirements. The most common types of mortgages are listed below:
Fixed rate mortgages:
With a fixed rate mortgage this means that the interest rate that you pay will be fixed from the start of your mortgage for a fixed period of time. E.g. 2, 3, 5 years or even 10 years.
Variable rate mortgages:
With a variable rate mortgage this means that the interest rate you pay may go up or down and will be subject to the BOE (bank of england) base rate changes.
First time buyer mortgages:
These types of mortgages are specially designed for first time buyers and may include more attractive rates, cash back offers or reduced application fees.
How do you apply for a mortgage?
Mortgages can be obtained either direct with the lender of your choice or via a mortgage broker who has access to a diverse range of lenders.
Using a independent mortgage broker can provide you with greater choice as they are mortgage professionals who are able to search the whole mortgage market to find you a great deal whereas going to the bank or mortgage lender direct will restrict your choice to their own mortgage products only. If you are confident that you have found the right mortgage yourself then you may apply direct with the lender; however if you need advice and guidance then using a mortgage broker may be more suitable.
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