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If you want to buy a house or flat you will usually need a mortgage. A mortgage is a loan which is paid off over a long period, called the term of the mortgage. This is usually 25 years. Over the 'term of the mortgage' you pay off the amount you borrowed plus interest on the loan.
Types of mortgages There are two main types of mortgage: - repayment mortgages
- interest-only mortgages
There are many different types of mortgage , which is why you need to compare deals and get advice before applying. Back to top
Length of mortgages Most mortgages are for 25 years, but it can be more or less than this. If you can afford higher monthly repayments, a 20 year mortgage will cut the total interest you have to pay over the whole term. Some lenders will insist on a shorter term in some situations, or they may agree a longer term, which would mean paying a bit less each month. If you're buying with one or more other people, you can apply for a joint mortgage . The amount you can borrow will depend on how much each of you earns. Back to top
I can't pay my mortgage The mortgage is 'secured' on the property. This means that your lender can evict you and repossess your home if: - you don't keep up your payments,
- you break other terms of your mortgage agreement.
Because you run the risk of losing your home if you don't keep up your mortgage payments, you may want to take out ' mortgage protection ' insurance which would help you if, for example, you have an accident which means you are unable to work. Back to top
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