A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. The loan is ‘secured’ against the value of your home until it’s paid off. If you can’t keep up your repayments the lender can repossess (take back) your home and sell it so they get their money back.
The money you borrow is called the capital and the lender then charges you interest on it till it is repaid. The type of mortgage you are able to apply for will depend on whether you want to repay interest-only or interest and capital.
Invariably today, residential mortgages are only granted with full repayment (interest and capital), meaning you pay the interest and part of the capital off every month. At the end of the term, you should manage to have paid it all off and own your home. With interest-only on the other hand, you pay only the interest on the loan and nothing off the capital, meaning at the end of the term, the capital outstanding is owed to the lender.
You are responsible for ensuring a credible repayment strategy is in place so you have sufficient funds available to fully repay the loan at the end of the mortgage term. Failing to maintain an adequate repayment strategy could result in you having difficulty in fully repaying the mortgage capital when due.
There are different interest rates available from all lenders, to suit varying requirements and situations, and these combined within a mortgage is termed the product:
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £595.