A mortgage is essentially a way of borrowing money over the long-term to finance the purchase of a property. Because a mortgage is used to pay for a property, the mortgage lenders can recoup their money by repossessing your home should you fail to keep up your mortgage payments.
There are two basic types of mortgage, repayment mortgages and interest-only mortgages. The former means that the money you pay back to the lender each month contributes to the initial mortgage capital as well as any interest charges. With the latter however, you only cover the interest charges that have been accumulated, and the money you originally used to buy the property is only due at the end of the mortgage term.
Each of these mortgages has its own merits, and you should seek expert advice if you are unsure which of the two better serves your needs.
Once you have chosen the type of mortgage you are going to have, the next task is to decide on the best product for you. Mortgage lenders all have slightly different products available, and the names of these products will vary slightly in each case. However, the main ones are fixed, variable, discounted, capped and tracker, all of which are discussed on our interest rates page.
Taking out a mortgage can be complex, but there are certain practices you can use to help make the whole process less painful. Firstly, get a clear idea of the amount you want to borrow and more importantly, the amount you will be able to borrow. Online mortgage tools are an extremely useful tool that can help you work this out for yourself. They should also give you a good idea of the length of the mortgage term you are going to need.
Next, make sure you can afford to pay back the mortgage. Just because you are approved for a large mortgage does not mean that this is the best thing to do. Make sure that you don't stretch yourself too much financially, if interest rates rise or your circumstances change, you need to be confident that you can continue to cover your mortgage payments.
When you are clear about the type of mortgage you are looking for, start searching and comparing different lenders and their various products. Some providers will offer excellent deals to get you onboard, but make sure you look at the bigger picture to work out whether the product is right for you in the long-term.