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How Mortgages Work

A mortgage is a loan to buy your home.  You borrow money and pay it back with interest over a period of time (the ’mortgage term’) that you agree with the lender – usually a bank or building society.

The loan is secured against your home so if for any reason you are unable to repay it, the bank or building society can sell you home to get its money back.

How much can you borrow?

This depends on your personal circumstances, such as you income and expenditure and whether you’re buying alone or with a partner.

How to repay your mortgage.

You can choose to pay your mortgage back in on of the following ways:

  • - Repayment – your monthly payment is split between paying off the loan and paying off the interest charges on the loan.
  • - Interest Only – your monthly payment pays only the interest charges on the loan, and you must arrange some other way to repay the actual loan.
  • - A combination of repayment and interest only.

Most people will take out a mortgage for 20 to 30 years so that it is affordable.  You can choose a term to suit you as long as the lender agrees you can afford it.

With a repayment mortgage over a shorter term, you’ll have higher monthly payments but pay less in total.  With a longer term, you’ll pay less each month but more in total.

With an interest-only mortgage you pay the same each month to the lender no matter how long the term is.  Remember this only pays the interest and not the loan itself.

It’s not a good idea to have a mortgage term that continues past retirement age unless you are sure that you will be able to afford the payments then.


Simply Mortgages
62 High Street
LL57 1NR

Tel: 01248 371088


Legal disclaimer

Simply Mortgages is authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage. Some Buy To Lets are not regulated by the Financial Conduct Authority.