What Is A Mortgage?

What exactly is a mortgage and who can get one?

A mortgage is a loan that is secured on a property meaning that the person that has taken out the mortgage agrees that the lender from whom they are borrowing the money is legally entitled to take possession of that property as security if the mortgage payments are not paid, in time or at all. Mortgages are usually taken out over a relatively long period of time, such as 25 years, although this is not always the case and will depend on factors such as the age of the borrower and the amount of money being loaned. The mortgage will be repaid by the borrower, with interest, over the agreed time period, usually on a monthly basis.

Who can get a mortgage?

There are many different organisations that lend mortgages and they will usually assess your financial circumstances to see how much you can afford, the amount of monthly repayments you can afford to make and whether you have an acceptable credit history.

How do you go about getting a mortgage?

You may wish to seek advice from an independent mortgage adviser who will be able to inform you of the many deals on the market and will provide you with independent advice as to which mortgage deal is the most appropriate for you bearing in mind factors such as your financial circumstances, age, and employment situation. You will then be able to apply to the mortgage lender to see if they are able to offer you a mortgage which suits your needs.

What are the risks of having a mortgage?

If your mortgage application is successful, it is of paramount important that you keep up your mortgage payments in accordance with the agreed terms between you and the mortgage company otherwise the lender will be within their rights to take possession of your property, meaning that your home may be at risk. If you have a mortgage which you are struggling to pay you should contact your mortgage lender for advice.

What are the alternatives?

If you choose not to, or unable to, obtain a mortgage you have the option of renting a property, which many people these days now choose to do. Rental agreements can be for 6 months, 12 months, or any other fixed time that is agreed between you and the owner of the property. You will then usually be required to pay an agreed amount of rent to the property owner on a monthly or weekly basis.

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