What is a mortgage and how does mortgage work?

A mortgage is a loan that helps you buy a property. It allows you to pay for your home in monthly payments, including the amount borrowed and interest. Mortgages are key for making homeownership possible.

There are different types of mortgages, such as fixed-rate mortgages, where the interest rate stays the same, and variable rate mortgages, which can change. You might also consider tracker mortgages, discount mortgages, or interest-only mortgages.

When you’re ready to buy a property, you’ll need to get a mortgage from a lender. This involves applying for a loan and sharing your financial details. Once approved, you’ll agree on a mortgage term—usually 15, 20, or 30 years. During this time, you will make monthly repayments. At the end of the mortgage, you’ll own your home.

Understanding the main types of mortgages and how interest rates work, including the Bank of England base rate, is crucial for finding the best mortgage deal for your needs.

How do I qualify for a mortgage?

To qualify for a mortgage, lenders will consider several factors to ensure you can comfortably make the monthly repayments. Here are the key points:

Income and employment

Credit score

Existing debts

Deposit

Property assessment

By understanding the qualification process and preparing your finances, you can increase your chances of getting approved for the mortgage you need.

Types of mortgages

Bad credit mortgage

This type of mortgage is designed for individuals with a less-than-perfect credit history. Lenders may offer higher interest rates, but it provides a chance to buy a home despite past credit issues.

Residential mortgages

Residential mortgages are the most common type used to buy a home for personal use. They come with various terms and interest rates, allowing buyers to choose what fits their budget.

Buy to let mortgages

Buy to let mortgages are for those who want to purchase property to rent out. These loans often have different requirements, focusing on potential rental income rather than personal income.

Commercial mortgages

Commercial mortgages are used to buy business properties, such as offices or retail spaces. These loans typically require a larger deposit and have different repayment terms compared to residential mortgages.

Capped-rate mortgages

Capped-rate mortgages offer a fixed interest rate with a limit on how high it can go. This means you enjoy stability while still benefiting from potential lower rates if the market improves. With a fixed rate, you can accurately budget your monthly repayments.

Discount mortgages

With discount mortgages, you receive a lower interest rate compared to the lender’s standard variable rate for a set period. This can lead to significant savings on your monthly payments, making it easier to repay your mortgage.

Flexible mortgages

Flexible mortgages allow you to adjust your payments based on your financial situation. You can overpay, underpay, or even take payment holidays, making it easier to manage your finances and repay your mortgage at a pace that suits you.

Guarantor mortgages

Guarantor mortgages involve a family member or friend agreeing to cover your mortgage payments if you can’t. This option can help first-time buyers secure a loan with a lower deposit, making it more achievable to repay your mortgage over time.

Limited company buy to let mortgages

This type of mortgage is for landlords who want to buy rental properties through a limited company. It can offer tax advantages and is often preferred by property investors.

Portfolio landlord mortgages

Portfolio landlord mortgages cater to individuals who own multiple rental properties. These loans take into account the overall income from all properties, making it easier to manage multiple investments.

Additional mortgage services

Mortgage pre-approval

Our mortgage pre-approval service helps you show sellers that you’re a serious buyer. We’ll review your finances to determine how much you can borrow, giving you a competitive edge when making an offer.

Mortgage calculators

We have easy-to-use mortgage calculators that allow you to estimate your monthly payments. Simply input your loan amount, interest rate, and term length to see how different options fit into your budget. Check it out now!

Mortgage advice and consultation

Our team of mortgage advisors is here to guide you every step of the way. We provide personalised advice to help you navigate the mortgage process, find the best deals, and make informed decisions that suit your financial needs.

Alternative to mortgage

Bridging loans

Bridging loans are short-term loans that help you buy a new property before selling your current one. They provide quick access to funds, making it easier to secure a new home while waiting for your existing property to sell.

Learn More About Bridging Loans.

What does our mortgage process look like?

What are the common fees when applying for a mortgage?

When applying for a mortgage, you may encounter several common fees:

Should I use a mortgage broker?

Using a mortgage broker can simplify the process when you apply for a mortgage. They have access to a wide range of lenders and can help you find the best mortgage offer based on your needs.

Brokers can also guide you through the mortgage application process, making it easier to understand your options, whether you prefer a fixed-rate mortgage or another type.

Working with a broker means you can save time and potentially secure a better mortgage payment. They can help you navigate the details of your mortgage term and repayment plan, ensuring you make informed decisions.