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What is a mortgage?

A mortgage is a loan that enables you to buy a house. Watch our short, easy-to-understand video to find out how mortgages work.

In this article
Video: what is a mortgage? What types of mortgage deals are there? How do mortgage rates work? What is a mortgage agreement in principle?
How long does a mortgage offer last? What is a mortgage broker? Get expert help finding the right mortgage

Video: what is a mortgage?

A mortgage is a loan that enables you to buy a house. Watch our short, easy-to-understand video to find out how mortgages work.

Saving for your first mortgage?

Call Which? Mortgage Advisers for expert guidance through every step of the mortgage process.

Your home may be repossessed if you do not keep up your mortgage repayments.

What types of mortgage deals are there?

With hundreds of deals to choose from, finding the right mortgage can be a complicated business. 

The video above explains the key differences between a repayment mortgage and an interest-only mortgage, which you can also read more about in our guide to interest-only and repayment mortgages.

Take a look at the pros and cons of fixed-rate mortgages, tracker mortgages, discount mortgages and standard variable rate mortgages

The mortgage you choose will depend on your circumstances. Some important things to keep in mind when deciding which type is right for you include:  

  • how much you've have saved for a deposit
  • the type of property you're buying - a house, flat, new-build etc
  • the length of time you want to be paying off the mortgage
  • how much you can afford to pay each month.

For more information on how to choose the best mortgage for you, visit our guide to which type of mortgage deal is right?.

How do mortgage rates work?

With so many different types of mortgage available, interest rates can vary considerably.

Mortgages with a fixed rate over a long period of time tend to charge more interest, as you're paying for the security of knowing that the amount you pay won't change during that period.

It's not just the interest rate you need to look out for though.

While choosing the the lowest rate might seem like the best option, low-rate mortgage deals often come with large arrangement fees, meaning you could end up spending a much larger chunk up front to secure your deal.

Depending on your circumstances, a mortgage with a higher interest rate and smaller arrangement fees could work out cheaper.  

What is a mortgage agreement in principle?

A mortgage agreement in principle (also known as a decision in principle) is a statement from a bank offering to let you borrow a certain amount of money, subject to full affordability checks being passed.

An agreement in principle shouldn't be seen as a guarantee that you'll get the money - but it can work in your favour if you're competing with other buyers for a property. 

You can find our more in the full guide on mortgages agreements in principal from Which? Mortgage Advisers.

How long does a mortgage offer last?

Once you've received formal confirmation of your mortgage offer, you'll need to complete your purchase within a timely manner before it expires.

Most mortgage offers last for three to six months - longer deals are available on new-build homes - and if you don't complete your purchase in this time you'll need to ask for an extension.

In some cases, this means you might have to go back through the bank's affordability assessments. 

What is a mortgage broker?

Searching for a mortgage can be complicated, but you could save time and get a better deal by using a mortgage broker.

A whole-of-market adviser can look at the entire mortgage market (including those only available through brokers) and recommend the right deal for you.  

While some products are only available through intermediaries, a handful of banks don't sell their mortgages via brokers and instead only offer them directly to customers.

In this instance, a good broker should advise you if a better deal is available by applying yourself.

Get expert help finding the right mortgage

If you'd like impartial, expert advice on getting the best mortgage deal, Which? Mortgage Advisers can help. Call 0800 197 8461 or fill out the form below to arrange a call.

ON TRACK FOR THE BEST MORTGAGE?

Which? Mortgage Advisers listen carefully to what you need, then search thousands of mortgages to choose the No.1 for you, even if it's one you can only get direct from the lender.

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