What is a residential mortgage?
A residential mortgage is essentially a large loan designed to help the borrower purchase a house.
The general idea is to make up the value of the property with a combination of an up-front cash deposit and a mortgage loan which you then pay back in monthly instalments over an agreed term with interest added.
Residential mortgages can only be taken out on a house being used as the borrower’s residence; if you’re using a property for commercial purposes (i.e. letting), you’ll need a different kind of loan, like a buy-to-let mortgage.
There are various different types of mortgage available to suit different types of borrowers. Whether you’re a first time buyer looking to get on the property ladder, or you’re moving into your fifth home, there’s bound to be a mortgage available tailored to suit your specific needs.
First Time Buyers
For first time buyers, mortgages can seem as expensive as they are necessary. The likelihood is that you’ve never taken out a loan as large as your first mortgage, but don’t let this scare you – as long as you have a decent enough credit score you should be able to take advantage of great interest rates.
At any point during your mortgage, you’ll be able to switch to a new one if you so desire – if you think you could benefit from better interest rates for example.
If you’re moving house before your mortgage term is over, you’ll have the option of doing what is known as ‘porting’ a mortgage. This means you’ll take your existing mortgage to your new property, effectively remortgaging with the same company.
Bear in mind though that if you do decide to do this before your original mortgage expires, you’re likely to face penalty charging for early redemption.
Think carfully before securing other debts against your home.Your home may be repossessed if you don't keep up repayments on your mortgage or any other debt secured on it.