We understand that mortgages can be totally confusing given that there are so many deals to choose from. At Hannah we make mortgages simple and easy to understand. So whether it's your first home, your existing home or you're moving home, let us guide you every step of the way.
*Barclays figures, June 2012 www.thisismoney.co.uk
Your home is likely to be your largest purchase you'll ever make. Before arranging your mortgage it's best to make sure you know what you can afford to borrow. Find out all about mortgages, the different types and how the process works.
A mortgage is a loan you take out in order to buy a property or land. Typically, a mortgage will run for 25 years but the term can be shorter or longer if required.
The loan is secured against your property's value until it is paid off. If you can't keep up with repayments the lender can repossess your home and sell it so they get their money back.
The money you borrow from the lender is called the capital and the lender then charges you interest on that amount until it is repaid. Deciding whether you want to repay interest only or interest and capital will affect the type of mortgage you're able to apply for.
With repayment mortgages you pay part of the capital plus interest off every month. At the end of the term which is typically 25 years, you should have managed to pay it al off and own your home.
Interest only mortgages mean you only pay the interest on the loan and nothing off of the capital. You will then have to have a separate plan for how you're going to repay the original loan at the end of the mortgage term.
Now you know how a mortgage works you need to think about what mortgage type you need. Mortgage come with fixed or variable rates.
With a fixed rate mortgage your repayments are the same for a certain period of time - typically 2 to 5 years regardless of whether interest rates are fluctuating in the wider market.
If you go for a variable rate mortgage, the rate you pay could go up of down, in line with the Bank of England base rate. There are a variety of different variable rate mortgages available.
When you buy a property you will need to pay a deposit. This is an amount of money that goes towards the cost of the property you're buying. The more of a deposit you have to put down, the lower the interest rate could be.
For example with a £15,000 deposit on £150,000 property, the deposit is 10% of the price of the property you want to buy. The LTV (Loan to Value) is the remaining 90%. The mortgage is secured against this 90% portion.
The lower the LTV, the lower your interest rate is likely to be. This is due to the fact the lender takes less risk with a smaller loan. The cheapest rates are usually for people with a deposit of 40%.
Lenders fees are variable dependent on the mortgage product offered. In addition, we may charge a fee* for arranging your mortgage.
*Typical representative fee charged by Hannah for arranging a mortgage ranges between £99 and £250 dependent on type of product and individual circumstances.