What is a mortgage?
A mortgage loan is a home equity loan you apply for from a mortgage company which gives you sufficient funds to buy a home and for which you normally have to pay at least 10% of the price of the property (the deposit) as a condition.
Your deposit can be as low as 5% if you buy your property in conjunction with one of the Government's
Help to Buy schemes.
You have to pay interest on the housing loan and your mortgage term can run from 10 to 40 years.
What kind of mortgages are available?
The short answer is many - more than 3000 and counting - but there are broad types.
If you are buying a property to live in, you normally take out a repayment mortgage, where your monthly home mortgage loan repayments go towards paying off the principal/capital (the loan itself) as well as the mortgage interest. Mortgage interest rates vary depending on the mortgage product you choose so make sure to spend time searching the market for the best deal.
For buy to let mortgages, you have the additional option of an interest-only mortgage. Monthly repayments are devoted entirely to paying off the interest accruing on the mortgage but you are still committed to clearing the principal by the end of the mortgage period.
A home loan from either of these two main types will also be defined according to the way that the interest on the loan is calculated. The most common types of these different approaches include fixed rates (where the interest rate is fixed for a set period of years) and tracker mortgages (where the interest rate varies in line with movements in the Bank of England base rate) but there are others, such as offset mortgages, discount mortgages and standard variable rate mortgages.