These are some of the most common questions. Hopefully we will be able to give you some insight into some of the issues. Whilst some ideas are answered here, there are a million things that we could write about, but that would take a bit more space! 

 

(This is a new page and more information will be added from time to time). 

A mortgage is a legal agreement between a lender and a borrower. The lender agrees to lend the money to buy a property provided the borrower can repay and agrees to the particular terms and conditions. The borrower must repay the mortgage regularly and for an agreed length of time. The monthly repayments are calculated over time and have interest charged to them. There are fees for setting up a mortgage charged by the lender, the lawyer, the valuer and the mortgage broker. 

This is a very important bit. If you fail to make the monthly repayments then the house can be repossessed and you would have to leave it. 

 

For a freehold house you must have buildings insurance to get a mortgage. If you are buying a leasehold property then you are not responsible for that insurance (the landlord is responsible). 

 

All other insurances are at your discretion. That includes life, critical illness, family income, pure income and so on. However, not insuring against the greatest debt most people will have is not prudent and puts a family home at risk should the worst happen. If you have a family you need to consider what will be the impact if the person(s) responsible for paying the mortgage were to die or become seriously ill. 

 

The amount that someone can borrow is generally governed by how much they earn. Typically, lenders will take earnings from PAYE, limited company salaries, dividents or profits. Other earnings can include maintenance, state benefits, rental income and pensions. It also possible to take income from insurance payments. (I know because I have done this for a client).  

Lenders have different calculation methods and it is common for the amount of borrowing to varying by very large amounts from one lender to another.  

Remember that lenders will also deduct financial commitments from the borrowing. So if you have credit cards, loans, leasing agreements, or pay maintenance or have dependents, then this will reduce the amount of borrowing you can have for a mortgage.