What is a mortgage?
A mortgage is a loan that you can take out to fund your purchase of property or land. Buying property or land is often the biggest purchase you are going to make. If you are considering taking out a mortgage to make this acquisition it is important that you understand the process and make sure you can afford the mortgage repayments. You will usually need to have at least 5% of the purchase price to put down as a deposit, however the larger the deposit the better mortgage deals you are likely to be able to access.
You will also need to keep in mind the other costs involved in buying a property for example mortgage fees or stamp duty (You can use our Stamp Duty Calculator to estimate these payments).
Use the below mortgage repayment calculator, provided by our partners SPF Private Clients, to get an idea of the monthly mortgage payments that may be due should you be financing a property purchase with a mortgage.
Types of Mortgage
There are various types of mortgages available to buyers. The most common repayment period is 25 years however, depending on the mortgage this can be a shorter or longer amount of time. Mortgages usually fall into two main categories:
Repayment Mortgage – With this mortgage, you will be making monthly payments that cover the mortgage interest and part of the amount borrowed. This type of mortgage gives you the opportunity to pay off the entirety of your mortgage and own your home outright by the end of the term.
Interest only Mortgage – Unlike the repayment mortgage, an interest only mortgage only requires you to make payments that cover the loan interest. These types of mortgage are less popular with lenders as the property owner is not paying off the loan itself
Within these categories, you may be able to choose from various types of mortgage deal, depending on what suits you best.
Fixed-rate Mortgage – This type of mortgage means your monthly mortgage repayments would stay the same for a set length of time, the most common period being two – five years.
Variable rate Mortgage – With this type of mortgage your monthly repayments will vary, as the amount of interest you will pay can go up or down, usually in-line with the Bank of England’s base rate. This mortgage type also includes tracker mortgages and discount mortgages.
Standard Variable Rate Mortgage – This mortgage type works in a similar fashion to the to the variable rate mortgage, however it is based on the lenders own standard variable rate which they set themselves.
How to get a Mortgage
If you are looking to take out a mortgage to buy a property, you can apply directly to the bank or building society you want to use or you can enlist the help of a mortgage broker or Independent Financial Adviser who will be able to provide professional advice, find the best deal for you and submit your application.
You may find there are some deals that you can only get by applying directly yourself, and others that only mortgage brokers can access.
There are many rules and regulations around mortgages and repayments, so it is recommended that you seek professional financial advice.
SPF Private Clients (SPF)
Strutt & Parker are pleased to introduce you to SPF Private Clients (SPF), the award winning mortgage brokerage.
SPF has access to a wide range of mortgage options including
preferential rates and bespoke arrangements.
SPF's mortgage brokers understand the market inside out and will know which lenders to approach in order to find the most suitable and cost-effective mortgage for you.
Expertly placed to guide you through the mortgage process, they will manage the transaction on your behalf from start to completion, whether you are buying your first home, moving up the property ladder or adding to a property portfolio.
With mortgage rates remaining low, we recommend you contact an SPF mortgage broker who will be able to tell you how much you can borrow and at what rate.
SPF are able to assist with the following:
- Residential mortgages – both for purchase and remortgage
- Investment mortgages
- High value mortgages
- Loans for expats and foreign nationals
- Portfolio finance
- Specialist mortgages – bridging, development loans, self-build, refurbishment finance, auction finance
- Overseas mortgages
- New-build mortgages
- Agricultural and estates finance
Your home may be repossessed if you do not keep up repayments on your mortgage.
Changes in the exchange rate may increase the sterling equivalent of your debt.
A fee of up to 1% of the loan amount is payable. For example, if SPF arrange a loan of £100,000 the fee could be £1,000. The exact fee charged will depend on the amount of work undertaken and will be confirmed by SPF before any work is undertaken.
For bridging and agricultural finance, SPF’s fee charging structure is slightly different. For more information on how they charge visit their website or contact them for more details.
SPF Private Clients Limited is authorised and regulated by the Financial Conduct Authority (FCA). The FCA does not regulate some forms of buy-to-let, commercial or overseas mortgages. SPF Private Clients, City Place House, 55 Basinghall Street, London, EC2V 5DX.
We routinely introduce our clients to SPF Private Clients Limited (SPF) for mortgage broking services. Should you decide to use the services of SPF, you should know that we expect to receive a referral fee from them of 25% of the aggregate of the fee paid to them by you for the arrangement of a mortgage and any fee received by them from the product provider.