What is a mortgage?
A mortgage is a large loan secured against a property to help buyers purchase their home outright and pay the mortgage back over time.
It will depend on the value of the property and your financial situation to see how much you can borrow.
Mortgage lenders calculate how much you can borrow by looking at your income, regular outgoings, credit score and any loans or credit cards you have.
What types of mortgages are there?
There are two main types of mortgages available, repayment mortgages and interest-only mortgages.
– What is a Repayment Mortgage?
This means that every month, you pay back instalments of what you borrowed, plus interest. You do this until you the whole amount is paid back.
– What is an Interest-Only Mortgage?
Instead of paying off the amount you borrowed in full, some people may opt to only pay the interest that is being charged. When the mortgage terms come to an end, you must pay off the total amount that you borrowed.
Depending on how the interest in calculated, you can opt for a Variable Rate Mortgage, a Tracker Mortgage or a Fixed-Rate Mortgage.
– What is a Variable Rate Mortgage?
When you take out a variable rate mortgage, you pay interest at what is known as the specific lender’s standard variable rate, or SVR. The SVR will fluctuate regularly, very broadly in line with inflation and with changes in the Bank of England’s base rate, but exactly how it does change is ultimately up to the lender.
– What is a Tracker Mortgage?
A tracker mortgage’s interest rates will change regularly depending on the Bank of England’s base rate, which has a set percentage (usually 0.5-2%) above it.
– What is a Fixed-Rate Mortgage?
A fixed-rate mortgage ensures you can guarantee the interest you are paying stays the same for a set number of years, typically between two and five years.
It removes the risk of increased payments and allows you to precisely budget during uncertain economical times.
In a previous blog, we explained homeowners are increasingly choosing to take out a three-year fixed-rate mortgage.
What is an offset mortgage?
An offset mortgage allows a person to use existing savings as overpayments or contributions towards your mortgage balance. You will then only pay interest on the remaining amount. For example if you have a mortgage worth £350,000 and £50,000 in savings, then you will pay interest on £300,000.
How long do mortgages normally last?
Mortgages usually last around 20 years, but differing repayment plans mean this can change from person to person.
If you are struggling to keep up with your existing payment plan then there are various options available to you. These include stopping payments for a short time and only paying off the interest, as well starting a new repayment plan after speaking to your lender.
How can I get the best mortgage deal?
Give Visionary Finance a call to talk to one of our dedicated, expert advisers who can help you take the first steps to securing your mortgage.
First we’ll have an initial consultation to understand your personal circumstance and details of purchase
Then we’ll need a collation of documents, which would typically include a personal fact find, identification, income verification, address verification and credit reports.
We’ll then carry out some market research to explore finance options available to you by discussing with our bank of lenders.
Once a suitable lender is found the application process is commenced and Visionary Finance will liaise with your lender during the application phase.
We will then issue a finance offer from lender subject to your case being agreed and underwritten by your lender.
- We’re a fee free, independent mortgage lender with access to more than 50 different high street and specialist lenders. Give our team a call on 01908 465100 or email firstname.lastname@example.org.