Key takeaways
A mortgage lets you purchase property by borrowing money from a lender, secured against the property itself
The larger your deposit, the better mortgage rates and deals you'll typically be offered
Fixed-rate mortgages maintain the same payments for a set period, while variable rates can change with market conditions
You can apply directly to lenders or use a mortgage broker who has access to multiple lenders
Self-employed applicants typically need 2-3 years of accounts or tax returns to prove their income
Looking to get on the property ladder as a first-time buyer? Or maybe it’s been a while since you moved, and you need your memory refreshed. It’s completely normal to feel a little confused or overwhelmed when it comes to mortgages. From fixed or variable rates to going directly to lenders or using a broker, there’s a lot to consider.
But we’re going to break it all down for you in a simplistic way, here’s a complete guide to mortgages.
Before diving into the nitty gritty of mortgages, let's first get a grip on what the definition of a mortgage is.
At its core, a mortgage is simply a loan that allows you to purchase a property without having to pay the full amount upfront. Instead of paying out the entire cost, you borrow a portion of the money from a lender and then gradually pay it back over an agreed period, along with some interest. In return, the lender needs something to rely on in case you don’t pay the full amount back.
Think of it like this, the lender is essentially giving you credit to buy property, and to protect their investment, the mortgage is secured against the home itself. While it might sound a bit daunting, this just means that if you fail to make repayments, the lender has the right to take possession of the property to recoup their money.