Mortgages Explained

When applying for a mortgage, most people want to find the best deal, and this doesn’t necessarily mean finding the cheapest option. Whether you’re a first time buyer or a homeowner looking for your next place, mortgages can be a complex area. There are many different types of mortgage to choose from, and it can be hard to know where to start.

You’ll need to consider:

  • Repayment rates
  • Overall repayment time period
  • Fixed vs. variable rates
  • Interest rates
  • Special types of mortgage or schemes e.g. first time buyers, buy to let
  • How long you’ll be locked into that lender for & early repayment charges

There are also many personal factors to take into consideration when applying for a mortgage. This includes your income, how many people will be on the mortgage and any existing debt.

You’ll also need to consider all the costs involved with purchasing a property, e.g. stamp duty, legal fees and surveys, and all your potential living expenses such as service charges, ground rent, contents insurance etc. Always work out your full budget at the start of the process.

How do mortgages work?

A mortgage is essentially a loan you take out with a lender to help buy a property. You’ll pay this loan back over a certain amount of years with interest. This will be over a term such as 25, 30 or 35 years, for example, and at the end of this term the full amount will be paid, meaning you’ll own your home outright. You’ll be expected to pay a deposit and have adequate funds to make mortgage repayments each month. The larger the deposit you can save, the more options you’ll have when choosing the right deal for you.

When you’re a first time buyer, you’ll usually need at least a 5% deposit, and there are various schemes which can support you such as Help to Buy. Our handy guides below will tell you more.


However, not many choose to stay in the same home all their life, often moving to a new place when circumstances change e.g. a bigger home to start a family. In these cases, you can sometimes take the mortgage with you (porting) or repay the original loan and take out a new mortgage. This is often the case when you’ve lived in your previous home for a number of years and have repaid some of the capital. Always be aware of early repayment charges and exit fees. Your property may also have gone up in value. Changing situations often mean you’ll be able to put down a larger deposit for a bigger home, and you’ll be able to find a mortgage more suitable for your new circumstances.

Many people choose to stay with their lender throughout, but when your introductory offer comes to an end, you’ll usually be switched to a mortgage in line with their standard variable rate (SVR). If you want a better deal, see what they can offer you, or look for a better deal elsewhere.

What are the different types of mortgage?

We’ve got several mini guides available for different types of mortgages and circumstances. Take a look to give you a better idea about the various deals you can get.

  • Fixed rate – fix your mortgage at a special rate for a certain amount of time
  • Variable rates – your mortgage will usually move in line with a lender’s standard variable rate (SVR)
  • First time buyer mortgage and tips for first time buyers – stepping onto the property ladder for the first time
  • Discount – a short-term deal at a reduced rate
  • Tracker – usually moves in line with the Bank of England’s base rate
  • Capped – put an upper limit on your interest rates
  • Cash back – get a percentage of your loan back
  • Interest only – only pay the interest on your mortgage while you save
  • Buy to let – buying a property to let out to others
  • Let to buy – letting out your own home
  • Bad credit   – advice for those with a bad credit rating
  • Guarantor – a nominated individual will be liable if you can’t pay
  • Flexible – overpay on your mortgage to compensate at another time
  • Self employed – advice for self employed workers
  • Self build – mortgages for building your own home
  • Offset – offset the interest with a linked bank or savings account
  • Remortgages – getting a better deal elsewhere or release equity from your property

Mortgage advisers

Many people choose to use a mortgage broker when they’re looking for the best deal for their circumstances. They’ll not only look at your personal circumstances but will also understand each lender’s requirements in full. This is a great place to start if you’re not sure what you want or want to simplify the process.

When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.