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Frequently Asked
Questions about Mortgages

To read more on this subject please see the list below or your mortgage guide or your home buying guide

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Value of Property £   (eg 125000) Borrow How Much? £ (eg 92500) Your Mortgage Type    - please select - Re-Mortgage Purchase Buy to Let Overseas   First time buyer? Yes No Have you found property? Yes No Country   - please select - Andorra Australia Bahamas Barbados Belgium Belize Bulgaria BVI Cayman Islands Cyprus Canada Dutch Antilles France Greece Ireland Italy Jamaica Malta Mexico New Zealand Poland Portugal Spain St. Lucia Switzerland Trinidad & Tobago Turks & Caicos USA Other.. Sorry ! The amount you want to borrow is less than £25,000. This is the minimum allowed for a mortgage. But don't worry! You could get the money via a personal loan. I want a free no obligation loan quote Click OK No thanks. I will change my borrow amount to more than £25,000 Click Cancel

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What is a mortgage?

A mortgage is a loan you take out from a mortgage lender to pay for a property.

If you don't pay back the loan, as per the agreement you make, then the mortgage lender can take possession of the property and sell it to repay the loan.

The loan is divided into the capital (i.e. the amount of money you borrowed to buy your property) and the interest (i.e. the amount the mortgage lender charges for lending you the money).

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How much can you borrow?

This depends on how much you earn and how much the property you want to buy is worth.

Depending on the property's value

Most lenders will loan up to 75% of the property's value and many will go to 90% or 95%. Some will even let you have up to 100% - but you'll pay over the odds for this and will probably be forced to buy mortgage indemnity insurance.

A few will even lend more than that but special rules will apply.

Depending on how much you earn

The amount you can borrow will vary between lenders but the rule of thumb is three and a half times your annual earnings. However typical variations would include:

Couple 1: two and a half times both annual incomes

Couple 2; three to three and a half times the greater income plus one year of the second income.

Some lenders now use more sophisticated credit rating methods, where they examine your income and your outgoings. The idea is that every borrower has unique circumstances.

Someone with teenage children and high outgoings can't afford to borrow as much as a singleton earning the same salary.

Sometimes people are lent five times income.

Here's a secret: Assuming you have a regular income and clean credit history you are likely to be offered a loan fairly easily.

Despite the impression you may be given that you've got to jump through the hoops, the competition between lenders is fierce and they want your business. To secure the loan though you'll still be best off playing the game by acting duly grateful though.

Perhaps the more important question is more how much can you afford. Some lenders will want to estimate this by checking your average outgoings e.g. your household bills, any debts etc. Some will get you to fill in a detailed questionnaire either by hand or on the phone or online etc.

If you're a first time buyer it will always help if you can show you've been paying regular rent for a similar amount to what your intended mortgage payments will be.

Depending on the area you want to buy in, sometimes lenders' may refuse a loan if they feel the property isn't expensive enough for the area. This is more likely to be the opposite - where a property is seen as too expensive.

Read More in our others ection about How Much you Can Borrow with a Mortgage

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What is remortgaging?

Remortgaging is not about buying a new home but switching your mortgage to another deal to lower your repayment amounts and save money. It is of particular relevance if the value of your home has risen.

If you want to read more about this now, see Remortgaging

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What is conveyancing?

Conveyancing is the legal work involved in buying and selling a house. It would normally be done either by a solicitor or a licensed conveyancer.

As a buyer you need to have one or the other for the sellers/vendors Estate Agent to contact immediately your offer is accepted so try to have one lined up before you get to this stage.

If you want to read more about this now, click here.

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Click here to go to the Home page and find out more information about UK Mortgages, UK Mortgage Quotes, UK Morgage Finance, Interest only mortgages (even with bad credit) or Home Insurance Policies Quote.

Mortgages Frequently asked questions

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