Frequently Asked Questions
What is a mortgage?
A mortgage is a loan from a bank or building society that lets you buy a property. It is a secured loan, which means the bank has the right to take back and sell the property if you cannot keep up with your monthly repayments.
What's the difference between a mortgage and a loan?
A mortgage is a type of loan that’s secured against your property.
A loan is a financial agreement between two parties. A lender or creditor loans money to the borrower and the borrower agrees to repay this amount, plus interest, in a series of monthly instalments over a set term.
There are several types of loans. Some are secured, such as a mortgage, but others are unsecured. This means you do not need to use an asset as collateral. However, the amounts borrowed with unsecured loans are usually smaller with higher interest rates.
How can I find the best mortgage?
Getting a mortgage is one of the biggest financial decisions you’ll make, so it’s important to get it right.
Direct
Banks and building societies lend most UK mortgages, but they only have their own limited panel of mortgage products and usually don't offer mortgage advice.
Through a broker
A mortgage adviser can search the market on your behalf and recommend the best deal for your circumstances. Remember advisers most have a limited panel of lenders, whilst a few are whole-of-market, which means they can offer mortgages from every lender, and some offer exclusive deals.
What are interest only and repayment mortgages?
Repayment
Most mortgages are repayment mortgages. Your monthly payments will go towards both the interest charged on your mortgage and clearing the outstanding balance. By the end of the mortgage term, you will have paid off the full amount borrowed.
Interest only
If you get an interest-only mortgage, your monthly repayments only cover the interest owed, so your balance will not go down. At the end of the term, you will need to pay off the full balance. This means you will need to have saved up this amount separately using a repayment vehicle like savings, shares, an ISA or other investment