Buying a home is the largest purchase you’re likely to make. Before you arrange your mortgage, make sure you know what you can afford to borrow. Find out where to get a mortgage, the different types and how the process works.
What is a mortgage?
A mortgage is a loan taken out to buy property or land. Most run for 25 years but the term can be shorter or longer. 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.
Working out what you can afford
Don’t stretch yourself if you think you’ll struggle to keep up repayments.
Also, think about the running costs of owning a home such as household bills, council tax, insurance and maintenance.
Shari Finances will want to see proof of your income and certain expenditure, and if you have any debts.
We might ask for information about household bills, child maintenance and personal expenses.
we also want proof that you will be able to keep up repayments if interest rates rise.
Applying for a mortgage
Applying for a mortgage is often a two-stage process.
The first stage usually involves a basic fact find to help you work out how much you can afford, and which type of mortgage(s) you might need.
The second stage is where the mortgage lender will conduct a more detailed affordability check, and if they haven’t already requested it, evidence of income.
How does a mortgage work?
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.
