What Is A Mortgage?

What Is a Mortgage?

Most people know roughly what a mortgage is - it’s the loan you take out to buy a home.

Technically, though, a mortgage is a ‘legal charge’ on your property. In simple terms, it means your lender has an interest in your home until the loan is fully repaid.

So if you sell your property, your Solicitor will be required to pay off the charge – the mortgage – so it can be sold on without any issues.

Mortgages are usually used to buy permanent homes such as freehold or leasehold properties, rather than things like static caravans or houseboats, which tend to be financed with cash or a personal loan.

Getting a Mortgage

You can apply for a mortgage directly with a bank, building society, or specialist lender - or you can use a mortgage adviser or broker (like us) to help you find the right one.

A professional adviser will be qualified and regulated, and will guide you through your options before recommending a specific mortgage that suits your circumstances. They’ll also have access to hundreds of deals you might not find on your own.

Since 2014, almost all mortgages must be arranged on an ‘advised’ basis, meaning you get proper guidance before applying - not just a product picked off the shelf.

Mortgage Regulation

Mortgage advice in the UK has been regulated since 2004, which means advisers and lenders must meet strict standards and act in your best interests. This is why they will need so much information about you before you can apply. 

Some loans - such as buy-to-let, second-charge, or those on properties that aren’t mainly residential - fall outside of these rules and don’t have the same level of protection.

What Lenders Need to Know

Before recommending a mortgage, your adviser will need a clear picture of your situation. Expect questions and documentary proof about your:

• Income and employment
• Family and dependants
• Existing debts or loans
• Credit history (you may be asked to get a copy of your credit report)
• Savings, assets, and current mortgage (if you have one)
• Proof of ID and address

The more accurate your information, the better and more suitable the advice will be. And honesty is always the best policy - you don’t want to conveniently omit things you would rather forget, only to get tripped up later!