Buying a home is likely to be one of the biggest purchases you will ever make. Prior to arranging your mortgage it's important that you know what you can afford to borrow. With this in mind, we will outline where to get a mortgage, the various types and how the process works. Read on to find out more.
What is a mortgage?
A mortgage is essentially a loan taken out to buy property or land.The majority of mortgages run for 25 years although some run longer than this. The loan will be ‘secured’ against the value of your home until it’s paid off. If you are unable to keep on track with payments the lender of the property can repossess the property and sell it to get the money back.
How do you work out what you can afford?
It's crucial that you don’t stretch yourself if you don’t think you will be able to keep up with the payments. Also, you’ll need to consider the running costs of keeping a home, this could be anything from household bills, council tax, insurance and maintenance.
The lenders will want some kind of proof of your income and expenditure if you have any outstanding debts. They may request information regarding your household bills and various other personal expenses. This is so they can see that you’ll be able to keep up with repayments if the interest raises.
Where do you get a mortgage?
You can apply through a bank or your building society. You can also use the services of a mortgage broker or independent financial advisor (IFA) who will be able to compare different mortgages on the market. Some brokers will look at mortgages from the ‘whole market’ while others look at products from various lenders. Taking advice is certainly highly advisable unless you are highly experienced in financial matters. It is in certain cases possible to choose a mortgage without getting advice – this is called an execution-only mortgage.
If for some reason the mortgage turns out to be unsuitable for you later on, it will be very difficult for you to make a complaint.
If you go down the execution-only route, the lender will still carry out detailed affordability checks of your finances and assess your ability to continue to make repayments in certain circumstances.
Different types of mortgage
Once you’ve figured out how to pay back the capital and interest you’ll need to think about the mortgage type that you want. With a fixed rate mortgage, your repayments will be the same for a period of time, this is often two to five years, regardless of other market rates. If you’ve got a variable rate mortgage, the rate you pay could change in line with the Bank of England base rate.
Are you looking to buy your first property or re-mortgage a current loan? Our experienced team at Andrew Lee & Co Property Lawyers in Kent, South East England will help you to streamline the experience. Our reliable team of professionals take the hassle out of mortgages, helping you to make an informed decision that aligns with your financial circumstances.Get in touchto find out more.
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