Introduction To Mortgages

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Mortgages are loans which are intended to help buyers purchase residential property. When you take out a loan, the lender charges interest: the same is true of a mortgage.

A mortgage is a ‘secured’ loan, which means that the loan is secured against the property being purchased until the mortgage is paid off. Sources of residential mortgages include high street banks, building societies, and other types of less well-known financial institutions.

Basic conditions

Mortgage providers follow a set of rules and procedures when deciding whether or not they will agree to provide a mortgage to purchase a residential property. Although different lenders apply different lending criteria, the amount a potential buyer can expect to borrow from a property’s purchase price is determined solely by the mortgage provider’s requirements.
Here are some of the factors lenders take into account when making their decision:

Affordability

Lenders will conduct stress tests to ensure you will be able to afford the loan amount you want in the event that interest rates will rise and repayments become more expensive. This is to prevent a situation where you cannot keep up with mortgage repayments and run the risk of having your home repossessed.

You can also take steps to make sure your mortgage is affordable should unforeseen circumstances arise, such as experiencing a drop in household income. You can do this by borrowing within your means as much as possible. Your adviser can explain affordability tests and the risks during your consultation.

Deposit

Depending on individual circumstances you may be required to provide a deposit. Deposits are used to mitigate the possibility of a purchaser being unable to pay their mortgage in the future, the lender needs reassurance that it can take your home and more easily recover the debt by selling the property. Your deposit also reduces the lender's risk in case the property somewhat declines in value. Reduced risk-taking means lower loan-to-value (LTV) ratios.

Valuation and Survey Fees

Before a lender will grant you a mortgage, it will insist on a valuation to prove the property is worth what you’re paying for it. The size of the valuation fee will vary by lender and property value.

The basic mortgage valuation is for the lender’s benefit so that it feels comfortable lending against the property. You may feel you want to add a survey to the valuation that gives you a report on the general condition of the property.

If you are buying an older property or one in a general state of disrepair, you may choose a full structural survey. This is a thorough survey that examines the structural condition of the property and gives you advice on repairs.

Obtaining comparable examples in the same area and for similar properties will help you obtain a benchmark.

Property type

Some properties such as flats over commercial properties, studio flats, and ex-local authority premises can be viewed as having reduced future attractiveness. As such, some lenders may not offer a mortgage to buy these properties and reduce your lending options.

Listed buildings (e.g. Grade 1, Grade 2) may have restrictions on how you can maintain or alter the property as well as buildings near to it (e.g. garage). Some unlisted properties can also be subject to similar restrictions (e.g. in an area of outstanding natural beauty).

Time frame

Mortgage providers generally have a maximum number of years over which they lend and will set a date when the mortgage must be repaid in full.

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Intelligent advice. Plain speaking. Excellent service. The three guiding principles of Ginkgo.

The best time to start a pension plan is now - and if you have already started, have a closer look at your arrangements to make sure you are on track.

The best time to start a pension plan is now - and if you have already started, have a closer look at your arrangements to make sure you are on track.

The government’s pensions freedoms regulations give holders of a personal pension greater flexibility in how they can access and use their fund.

With so many types of savings and investments, it’s wise to begin with expert advice on the potential risks and rewards for your personal situation.

Alternative investments are dynamic, higher risk investments in environments the UK government wants to support, such as future technology.

Planning now for the inevitable fact that we won’t be around for ever is one of the kindest things we can do for our loved ones.

Planning now for the inevitable fact that we won’t be around for ever is one of the kindest things we can do for our loved ones.

Crossing fingers is not enough. Protect yourself and your family financially by making money available, should something unexpected happen.

You probably already protect your business’s property and other assets. So don’t overlook your most valuable assets: your staff and shareholders.

A mortgage is one of the most expensive, complex purchases you’ll ever make. With thousands to choose from, it makes sense to take professional advice.

With advance planning and an effective tax strategy, you can avoid paying more to the government than you need to.

Our handy calculators were developed by mathematicians to help you get a handle on some of the figures behind your biggest financial decisions.

Financing property can be complex and costly

Body

Basic conditions

Affordability

Deposit

Valuation and Survey Fees

Property type

Time frame

Warning Text

Intelligent advice. Plain speaking. Excellent service. The three guiding principles of Ginkgo.

The best time to start a pension plan is now - and if you have already started, have a closer look at your arrangements to make sure you are on track.

The best time to start a pension plan is now - and if you have already started, have a closer look at your arrangements to make sure you are on track.

The government’s pensions freedoms regulations give holders of a personal pension greater flexibility in how they can access and use their fund.

With so many types of savings and investments, it’s wise to begin with expert advice on the potential risks and rewards for your personal situation.

Alternative investments are dynamic, higher risk investments in environments the UK government wants to support, such as future technology.

Planning now for the inevitable fact that we won’t be around for ever is one of the kindest things we can do for our loved ones.

Planning now for the inevitable fact that we won’t be around for ever is one of the kindest things we can do for our loved ones.

Crossing fingers is not enough. Protect yourself and your family financially by making money available, should something unexpected happen.

You probably already protect your business’s property and other assets. So don’t overlook your most valuable assets: your staff and shareholders.

A mortgage is one of the most expensive, complex purchases you’ll ever make. With thousands to choose from, it makes sense to take professional advice.

With advance planning and an effective tax strategy, you can avoid paying more to the government than you need to.

Our handy calculators were developed by mathematicians to help you get a handle on some of the figures behind your biggest financial decisions.

Financing property can be complex and costly

Introduction To Mortgages

Body

Basic conditions

Affordability

Deposit

Valuation and Survey Fees

Property type

Time frame

Warning Text

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