Residential mortgages
A residential mortgage is borrowing secured against a home you live in. Whether you’re buying or reviewing an existing mortgage, the repayment method, interest rate and term all affect what you pay each month and over time.
We’ll explain those choices and compare suitable deals from the lenders available to us. Your income, financial commitments, credit history and the property will all form part of the lender’s assessment, so the options depend on your circumstances.
With a repayment mortgage, your payments cover interest and reduce the amount borrowed. With interest-only, the borrowing remains due at the end, so you need a repayment plan acceptable to the lender. Availability depends on the lender’s criteria.
A fixed rate stays the same for an agreed period, helping you plan your payments. A variable rate can rise or fall, so your payments may change. Check what happens when an initial deal ends and whether early repayment charges apply.
The term is the time allowed to repay your mortgage, not the length of an initial fixed-rate deal. A longer repayment term can reduce monthly payments, but usually means paying more interest overall. It needs to fit your budget and future plans.
Two mortgages with similar monthly payments can have different overall costs. Alongside the interest, consider any product or arrangement fee and the cost of valuation, legal work or a survey. If a lender lets you add a product fee to the mortgage, you’ll pay interest on it too, increasing the amount you repay.
If you already have a mortgage, check whether changing it would involve an early repayment charge or an exit fee. We’ll explain the costs of suitable deals from the lenders available to us, so you can weigh up the monthly commitment and the wider cost before deciding whether to go ahead.
We’ll start with your circumstances and what you need from a mortgage, so we can explore the options available to you.
We’ll compare suitable deals from the lenders available to us and explain the repayments, fees and other costs.
If you decide to go ahead, we’ll guide you through your mortgage application and the information your lender needs.
There is no single amount that applies to everyone. Lenders consider your income and regular spending, existing debts, credit history and the property. They also assess whether repayments would be affordable if circumstances change. An initial borrowing indication is not a mortgage offer.
Your deposit reduces the amount you need to borrow when buying. If you already own the property, equity is its value minus the mortgage outstanding. The proportion borrowed compared with the property’s value is called loan-to-value; this can affect which deals a lender offers.
Some mortgages allow overpayments, but the limits and any charges depend on the deal. Check the terms before paying extra or clearing the mortgage early. An early repayment charge could reduce the benefit, so it’s worth understanding both the saving and the cost first.
Your home may be repossessed if you do not keep up repayments on your mortgage.
