Question 1

How does a mortgage work?

Accepted Answer

A Bank or other lender loans you money with interest. In return their loan is secured against the value of a person’s property. The details of the loan agreement are registered against the title of that property and this is known as a mortgage.

Question 2

What is a mortgage broker?

Accepted Answer

Hello, that's us. Mortgage brokers are specialist mortgage professionals who will look for a suitable mortgage product on your behalf in order to ensure you get the most appropriate deal.

Question 3

How much can I borrow?

Accepted Answer

There is no one size fits all criteria to determine what you can borrow. The amount you qualify for will be determined by the purchase price of the property, the deposit you are able to put down, your income and monthly expenses. However, generically speaking, you can expect to be able to borrow around 4x your income, although some lenders do offer more.

Question 4

What is an LTV?

Accepted Answer

Lenders often talk about the LTV requirement. LTV is an acronym for Loan to Value Ratio. This is a term used to describe the ratio of a loan to the value of the property purchased. For example if you borrow £200,000 to purchase a property valued at £250,000 the LTV is 80%.

Question 5

What is the difference between a repayment mortgage and an interest only mortgage?

Accepted Answer

A repayment mortgage is guaranteed to pay off your mortgage by the end of the term as long as all payments have been made. An interest only mortgage is where your monthly payments are only covering the cost of the interest and your loan amount will remain the same.  At the end of the term, you would either need to sell the property to repay the mortgage or find another source to repay the loan.

Question 6

Should I fix my mortgage and how long for?

Accepted Answer

There’s a range of factors to consider here, including interest rates, mortgage costs, and also your particular plans. Within the market, deals typically vary from two-year fixed-rate deals, through to 10-year fixed-rate deals, although some lenders will offer even longer timeframes.

Whilst you may like the idea of your monthly repayments staying the same for a decade, remember that if your circumstances change and you do need to sell during that time, you could face large early repayment charges. So, if you think you might end up moving in a few years, a shorter deal could be more appropriate.

Equally, if you’re going to be staying in your home for a while and are looking for some security should the Bank of England increase the base rate, then a longer term deal could be more suitable.

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General Mortgage Questions

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