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Which type of mortgage are you looking for?

About mortgages

About mortgages

What is a mortgage?

Finding the right mortgage is one of the biggest financial decisions you're likely to face, but what exactly is a mortgage and what should you be looking for to find the right mortgage?

A mortgage is essentially a loan of money, but the loan is secured against the property you're borrowing it for. That means that if you were to stop paying your mortgage your bank could repossess your home.

Mortgages are typically taken out for longer terms like 20 to 25 years. The longer your term the more spread out your costs, so the lower the monthly repayments, but the longer it will take to repay.

The mortgage providers charge you an interest rate to borrow the money. Often this rate is fixed for a certain period of time (say 2 years), after which it reverts to a higher rate. This is known as a fixed mortgage.

Some mortgages also charge various fees for booking the mortgage in, arranging the mortgage, and completing the mortgage. They may also charge you an early repayment fee if you wish to pay back your borrowing earlier than the term.

We provide all kinds of different mortgages for different purposes, from remortgaging to home movers and buy to let mortgages. If you're not sure what mortgage type is suitable below we explain different mortgage types below.

What is loan to value or LTV?

The LTV, or loan to value, is the ratio between the value of your property and the amount you're looking to borrow. All mortgages have a maximum LTV – that is a maximum percentage of borrowing in relation to the house value.

The typical LTV limit is 90%, although for those looking to borrow 95% of their home's value schemes like 'Help to Buy' may be available.

Typically the higher the LTV the higher the interest rate of the mortgage. Mortgages for first time buyers tend to have higher LTVs, and hence higher rates, in comparison to a remortgaging mortgage for existing homeowners.

How should I use the mortgage table?

Once you know what mortgage type you're after just choose the right tab and tell us what specific mortgage details you're after. These are the property value, the amount you want to borrow (the size of the mortgage), the term over which you want to repay your mortgage, and whether you're looking to for a repayment or interest only mortgage

How do I determine property value?

The property value is simply the price of the home you're after. A mortgage lender will need to do their own property valuation before offering you a mortgage, but for running a comparison you can get a good indication by using the price of the property or the value quoted by a surveyor.

Whilst some mortgage providers use a surveyor it is more common these days for a drive by valuation or desktop survey to be conducted. Your mortgage provider will combine this with land registry data, recent sales in the area, macroeconomic data, and house price indices.

What is the APR?

The APR is a good way of comparing different mortgages. It takes the overall rate charged over the lifetime of the mortgage, incorporates any fees, and gives you a baseline comparison rate.

While some mortgages may offer a low rate for the first two years for instance, once they revert they may prove to be more expensive over the full term. Or, conversely, one rate may have a lower rate but have high fees associated with it. The APR allows you to compare these mortgages and see what the best overall product is for you.

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