Mortgages

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A mortgage is a loan taken out to buy property or land. The loan is ‘secured’ against the value of your home until it’s paid off. If you can’t keep up your repayments the lender can repossess (take back) your home and sell it so they get their money back. The money you borrow is called the capital and the lender then charges you interest on it till it is repaid.

The type of mortgage you are able to apply for will depend on whether you want to repay interest only or interest and capital.

With repayment mortgages you pay the interest and part of the capital off every month. At the end of the term, typically 25 years, you should manage to have paid it all off and own your home.

With interest-only mortgages, you pay only the interest on the loan and nothing off the capital (the amount you borrowed).

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These mortgages are becoming much harder to come by as lenders and regulators are worried about homeowners being left with a huge debt and no way of repaying it. You will have to have a separate plan for how you will repay the original loan at the end of the mortgage term.

Re-mortgage

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Re-mortgaging happens when you change the mortgage you currently have on your property, either by switching it to a new lender, or by moving to a different deal with your existing lender. It can be a good way to find lower interest rates and better mortgage terms.

5 reasons to re-mortgage
Your current deal is about to end
The value of your home has increased
You want a better rate or are worried about rising interest rates
You want over-payment flexibility but your lender isn't flexible
You want to borrow more

First Time Buyer

Person buying a house or flat who has not previously owned a home and therefore has no property to sell’. In other words anyone getting a mortgage who isn’t a homemover, homeowner, buy-to-let investor or simply remortgaging is classed as a first-time buyer.

First-time buyer status can vary from lender to lender, while the Government has its own rules you’ll need to meet if you are to qualify for the benefits associated with being a first-time buyer, such as the removal of stamp duty on the first £300,000 of purchases up to £500,000.

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Buy to Let

The vast majority of buy-to-let mortgages are provided on an interest-only basis. This means that, for each month of the mortgage term, you’ll only pay the interest on the loan, and none of the capital. While this can be good news in the short term as your outgoings will be less each month, it’s imperative that you have a plan in place to either pay off the full loan or refinance at the end of your mortgage term. 

Commercial Mortgage

A mortgage loan secured by commercial property, such as an office building, shopping centre, industrial warehouse, or apartment complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property.

Terms can vary. Some repayment plans have three-year terms, while others may offer a term of 25 years; the average is around 15 years. The mortgage lender will typically lend up to 70% of the property’s value, leaving the business to pay its regular mortgage payments and utilising any working capital to fund the growth.

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