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Getting a Mortgage in the UK

A mortgage is a loan taken out to pay for the purchase of property, usually a house. Due to the size of the loan the lender will usually take security to cover themselves in the event of non payment of mortgage installments; usually they will hold the deeds of the house for this purpose. Mortgages in the UK are usually taken out over 25 years, although with rising house prices pricing first time buyers out of the market this term is often exceeded to 30 or 40 years.

The most important thing to consider when seeking the best mortgage deals for buying a new house is how much you can afford to pay on a monthly basis. Take into account contingencies, what would happen if mortgage interests rates rise to 10% or 15%, what would happen if you lose your job or are incapable of working? Consider the advantages and disadvantages of going for a fixed rate loan over a long period rather than a variable rate loan which follows interest rate fluctuations. Remember to factor in any relevant insurances to cover against eventualities.

Once you know how much you can afford you can begin to look at properties which fit in your price range, and you can get agreement in principle from your mortgage lender of choice that you will get a mortgage.

You have a wide choice of lenders available from high street banks and building societies to specialist mortgage lenders who cater to the self-employed, those with bad credit histories or other niche groups. These higher risk categories will be penalised with higher rates of interest on their mortgage. In some circumstances, individuals may not be able to find a lender willing to lend to them - or a lender may only be prepared to lend a certain percentage of the required amount. Mortgage brokers are well equipped to find mortgages which are tailored to many different situations, if your situation is 'non-standard' you should consider using a broker.

While mortgages for 100% of the value of a home are available, lenders usually prefer to give a lesser percentage and reward buyers who contribute cash by giving them a lower interest rate for the best mortgage deals.



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