Mortgages

A mortgage is the biggest financial commitment most of us will ever make. Take the time to understand the different mortgage types and speak with one of our Moneysprite mortgage brokers to discuss our mortgage advisory services.

We assist individuals, families, first-time buyers, self-employed workers, businesses requiring commercial finance and those with unique situations.

What is a mortgage?

A mortgage is a type of loan from a bank or building society used to purchase a property. Most lenders will agree to loan around 80% of the property price (LTV ratio) maximum, dependent on personal finances, existing debts, and your credit score. The property is used as collateral within the agreement, meaning the lender could sell the home to recover their money if you do not keep up with monthly mortgage repayments.

Different types of mortgages

There are several types of mortgages. Many mortgage types are based on how interest is calculated. For example, variable rate mortgage interest rates differ over the lifetime of the mortgage and tracker rate mortgages also differ but are tied to the Bank of England’s base rate. There are also fixed-rate mortgages that have a fixed interest rate for so many months or years before switching to one of the aforementioned types, usually a variable rate mortgage.

Mortgages can also be split by the structure of repayments or the purpose of the property purchase. For example, an interest-only mortgage only requires the interest to be repaid during the mortgage term and then the capital is repaid at the end, whereas a buy-to-let mortgage is for those buying property they plan to rent out. In a nutshell, there are many types of mortgages and only some will be suitable for your situation.