Understanding mortgages

In its simplest form the term mortgage means taking out a form of borrowing, usually a loan to help with the buying of your home.

A mortgage will be required when you are looking to get your first home, a better deal on your current mortgage or even if you need extra cash or another living space.

The borrowing which is provided by a mortgage lender comprises of many terms and conditions, the primary features being paying back the mortgage borrowing over an agreed period of time.  This is known as the repayment period.  Another important component is that the loan borrowing is provided to you based on a rate of interest.  

When you take out a mortgage loan with your provider the loan will more than likely be secured against your home, therefore this type of loan is referred to as a secured loan.  A secured loan provides the mortgage lender a measure of security and allows a vehicle for them to get their money back.  This would normally occur when you are unable to keep up with your regular monthly mortgage repayments.

Many people especially those who are looking to get a mortgage for the first time find the whole process of finding a property and then a lender to fund the mortgage quite daunting.  The mortgage process involves many processes and different parties and in brief it can be summarised as below.

1. Searching for your property
2. How much you can borrow? - Usually you can speak to the lender even before you have set your heart on the ideal home.  Lender can perform calculations to determine what you are able to borrow based on factual information such as your income, the type of work you do, your credit status and other details that will be checked.
3. Your New Home - Once you’ve found your dream home you will be required to submit a formal mortgage application form.
4. Property Valuation – Your lender will normally require a property valuation to ensure the borrowing required meets their lending criteria.  The fees for this will vary and the lender should provide different ways to pay this for example, upfront or added to the actual mortgage itself.
5. The Mortgage Offer – If you’ve ticked all the boxes and the lender is satisfied you meet all their requirements a mortgage offer is then offered.
6. The Legal Aspect – Conveyancing is generally the term that defines the process the solicitors are required to undertake.  This will involve ensuring all the relevant and appropriate searches are undertaken on the seller’s property.
7. Contract Signing – This will involve both the signatures of the buyer and the seller to confirm the final sale price that you have both agreed and any specific fixtures and fittings that have been mutually agreed that will be in the house when you move in.  At the same time a completion date will be finalised.  This process is generally managed by your solicitor.
8. Date of Completion – This can be the most exciting or nervous time for many buyers as this is the last stage of the buying process.  At this stage your solicitor will handle the transfer of payments and deeds to the relevant parties.

There may also be other times when you require a mortgage when the process above will be slightly different for example when you are looking remortgage or buying a property to rent.  These are outlined below.

Remortgaging

You may be looking to remortgage if your current mortgage deal is at the end of its fixed period and you are now looking to the market to get a better deal in terms of the benefits offered and to make a saving at the same time.  Remortgaging can often be viable when you are looking release built up equity on your home.

Buy-to-let

A buy to let mortgage is a special type of mortgage that is designed around the need of those who are looking to acquire borrowing to fund the purchase of a property with a view of renting it out. The terms of these mortgages and its purpose are very different to residential mortgages.

Mortgage Guide
Understanding mortgages Financing your mortgage Mortgage types Mortgage types explained What is HIPS? Choosing the right mortgage Mortgage protection cover Switching your mortgage	"In its simplest form the term mortgage means taking out a form of borrowing, usually a loan to help with the buying of your home"