Finding and Applying for a Mortgage

Know your options

Buying a home is likely to be one of the biggest purchases you are likely to make. It’s important to know how much you can afford, what you can borrow and the different types of mortgages available to you.

What is a Mortgage?

A mortgage is a loan you take out to buy your property. There are a number of different types of mortgages and most run for 25 years. The loan is secured against the value of your property and you will make monthly repayments until the mortgage is paid off or you sell your property. You can have either a repayment mortgage or an interest-only mortgage.

Repayment Mortgage

With a repayment mortgage you monthly fee will include both interest and capital.

Interest-Only Mortgage

With an interest-only mortgage you only pay the interest rather than paying towards the total amount you have borrowed.

How much can you afford?

It’s important to shop around to get the best deal. There are borrowing calculators and repayment calculators that you can use to give you a better idea of what you can and can’t afford.

Don’t forget to think about the fees and charges associated with getting a mortgage. There are arrangement or product set up fee’s, valuation fee and early repayment charges on top of your monthly costs.

Different Types of Mortgages

Fixed Rate

The interest rate you pay will remain for the duration of your deal no matter what happens. The benefits of the a fixed rate mortgage is that you know exactly how much you will be paying each month so you can plan and budget accordingly. However a fixed rate mortgage deal is likely to be a little higher than a variable rate mortgage.

Variable

The interest rate you pay can change at any given time. Changes to the base rate may mean an increases in your payments, on the flip side if there is a drop in the rate then you would have to pay less. On a variable rate deal you have a little more freedom to overpay or leave than on a fixed rate mortgage where you are charged for leaving.

Tracker

The interest rate that follows the Bank of England base rate plus an agreed percentage. So for example if your mortgage was set to the base rate + 1.5% you’ll pay the new base rate plus 1.5%.

Applying for a mortgage

To apply for your mortgage you’ll need to provide proof of ID and address, employment details and bank statements to prove that you can afford the repayments. Depending on your lending provider you may need to provide original documentation rather than copies.

Once these documents have been received they will conduct a credit check on the documents provided carry out an independent valuation on the property. If they are happy with your application you will receive a formal mortgage offer letter.

You’ll need to sign the letter and return it to your chosen lender to confirm your acceptance.

Once you take our your mortgage you will also need to get building and home insurance for your new home. This will help cover for any potential damage to your property or belongings in cases such as fire, theft and damage.

Please feel free to contact us in you need any more information or advice

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