Everything you need to know about mortgages: how to get one, how much you can borrow and finding the best deals
In this guide:
Includes how long it takes to get a mortgage
Mortgages and coronavirus
The Bank of England base rate was cut from 0.75% to 0.25% on 11 March 2020 due to the economic impact of the virus.
They cut it again on 19 March 2020, down to an all time low of 0.1%.
This could impact people looking to buy. It could also impact some existing homeowners, depending on their mortgage type.
Learn more about how coronavirus may affect your mortgage.
Mortgage rates are low so now is a good time to remortgage.
Check with your lender or with a mortgage adviser to find deals that could be better.
You may have seen a recent drop in your mortgage rate if you have a tracker or discount variable rate mortgage.
Changes are due to the lower base rate. Check with your lender to find out if your mortgage rate has changed.
Being furloughed may change things for you when looking to get a mortgage.
The scheme means you may get paid less than your usual salary.
The government is paying up to 80% of furloughed employees’ salaries.
Most lenders will only consider the furlough amount when working out what you can afford to borrow.
Being furloughed can also mean that your employment status is not secure. This could make lenders unsure about if they should lend to you.
You're more likely of getting a mortgage accepted if you apply when you're no longer on furlough leave.
Read how furlough can affect your mortgage application in our coronavirus guide.
What is a mortgage?
A mortgage is a loan you use to buy a property. You usually pay back the amount you borrow as well as interest.
The amount of interest you pay depends on:
the interest rate you’re on
how long your mortgage is for
The interest rate you pay depends on:
the size of your deposit
how you’ve managed debt in the past
the type of mortgage you choose
You pay back part of your mortgage every month for a certain number of years. Most people take out their first mortgage for 25 to 30 years.
You will not have have the same mortgage lender all that time.
This is because many mortgages have a reduced rate for a certain period, often for at least two years.
When that period ends, people tend to switch to another mortgage that has an initial reduced rate.
Switching mortgage lenders is remortgaging.
If you do not pay your mortgage, your lender could take your home from you.
If they did, it would be much more difficult for you to get another mortgage.
How to get a mortgage
It can take from a few weeks to several months to get a mortgage. Here’s how.
Work out how much you can borrow with our mortgage calculator.
You’ll need to put in:
Once you know how much you could borrow add up the other costs such as:
Some brokers, like Trussle, do not charge a fee.
A broker can give you a much more accurate figure of what you could afford than a mortgage calculator.
Learn more in our mortgage broker guide.
A MIP is a document that says how much you could borrow, in principle.
There's no guarantee that you'll get a mortgage if you get a MIP or a mortgage for that amount.
MIPs are useful to have as sometimes an estate agent will want to see one before they pass on your offer to a buyer.
Get a free Mortgage in Principle from Trussle online.
Use websites such as Zoopla or Rightmove to find homes you can afford and go and see them.
Do not wait for the perfect property as you may never find it.
Make an offer that suits your budget.
Contact your mortgage broker or lender when a seller accepts your offer.
A broker has a much wider choice of deals than a lender. A lender can only offer you their mortgages.
Trussle works with 90 lenders offering about 12,000 deals.
A solicitor who deals with buying a home is also known as a conveyancer.
It’s a good idea to ask around for a recommendation as there can often be problems when buying a property.
And some solicitors are much more expensive than others.
Your mortgage broker or estate agent may also suggest one, but you do not have to use them.
Give your broker the documents they need so they can apply for your mortgage.
As well as bank statements, they’ll need proof of:
The lender will look at your application and do a credit check.
Learn more in our credit score guide.
A lender needs to value the property to see how much it’s worth in case they have to sell it if you do not pay your mortgage.
There’s a chance they decide the property is not worth the price you’re paying for it.
This is a downvaluation and it could affect your mortgage.
The lender also needs to make sure that your home meets certain rules set out in your mortgage.
Speak to your broker if you’d like a more detailed survey done.
This is when the lender agrees to give you the mortgage you asked for.
Your solicitor and the seller’s solicitor will exchange your contracts. The only thing you need to do is sign yours.
Both solicitors will also find a date when you get the keys to your new home.
This is when the property is finally yours and is known as completion.
Pick up the keys from the estate agent and make yourself at home.
How much you can borrow
You can usually borrow around 4 to 5 times your salary.
Lenders have different rules and the amount they times your income by depends on many things.
Find out more about how much mortgage you can get.
Mortgage calculators will give you some idea of how much you might be able to borrow.
But there are some things that mortgage calculators do not take into account.
Get a more accurate estimate of how much you could afford to borrow.
Most basic mortgage calculators, including our mortgage calculator, are affordability calculators.
They tell you how much you may be able to borrow with a mortgage.
See how much you could borrow using our mortgage calculator.
The cost of a mortgage includes monthly repayments, plus fees and charges from the lender.
Some mortgage fees and charges include:
early repayment charge
arrangement fee or product fee
booking, reservation or application fees
chaps or funds transfer fee
deeds release, mortgage completion, redemption administration, discharge fees
More about mortgage fees and charges
Stamp duty is a land tax. How much you pay depends on how much you pay for your home and where it is.
It’s often the second biggest cost of buying a home after your mortgage.
Learn more and find out how much stamp duty you may need to pay in our stamp duty calculator guide.
In 2020, the government put a stamp duty holiday in place for buyers in England and Northern Ireland.
This means that when you buy a home that costs up to £500,000 you will not need to pay stamp duty.
You’ll still have to pay stamp duty if you buy a home costing more than £500,000.
This stamp duty holiday was set to end on 31 March 2021 but has now been extended until 30 June.
Between 1 July and 30 September, you will not have to pay stamp duty on homes costing up to £250,000.
From 1 October stamp duty rates will return to normal.
Find out more in our stamp duty guide.
Mortgage types and products
If you’re buying a property there are lots of different types of mortgages and products you can choose from.
Common mortgage types include:
Read more about mortgage types and products
A house deposit is the money you pay towards your home before you start paying the mortgage.
It’s a percentage of the total house price and you usually have to pay at least 5%.
It is possible to get a mortgage with no deposit.
Learn more in our house deposit guide.
When the initial period of your deal ends, you'll move to your lender's standard variable rate (SVR).
This will usually make your monthly payments higher.
The difference between a market leading deal and average SVR is around £4,700 in interest a year. This research is from the Trussle Mortgage Saver Review 2018.
Trussle remortgage customers saved an average of £3,480 a year on their mortgage repayments than if they'd stayed on their SVR.
Start looking for a new mortgage deal 3 to 6 months before your lender moves your mortgage deal ends. This will give you time to switch before you move to the SVR.
Learn more in our remortgage guide.
Mortgage with arrears
If you fall behind paying your mortgage, talk to your lender.
Your lender might let you:
pay your mortgage for longer
pay only the interest
have a mortgage holiday
You could reduce your monthly payments so you can manage them by extending a 25 year mortgage to 30 years.
If you extend your mortgage, you’ll pay more interest in the long term.
You may be able to switch to only pay the interest for a short amount of time. Most mortgages will ask you to pay both the interest and loan.
This will also make your monthly payments lower. You’ll need to decide how to afford the payments when they go up again.
Your lender might offer you a payment holiday. This means they'll let you stop making payments for a certain period of time.
This is not possible with all mortgages.
When the holiday ends, your mortgage balance will be higher because you have not been paying it off. This means your payments will be higher too.
Lenders will often write to you 15 days after you miss a payment.
Often they give you at least three months to sort out your payments.
If you’re still behind on payments, your lender will consider other ways of getting their money back.
This includes repossessing your home.
If they decide to repossess your home, they’ll go to court to get a possession order.
If the court gives your lender a possession order they'll have a legal right to own your home from the date on the order.
If you do not leave your home by that date, your lender can ask the court to evict you.
You'll be able to stay in your home as long as you keep up with the payments set out in the order.
You can sell your home rather than risk your lender taking you to court.
Lenders prefer to sell homes fast so you could get a better price doing it yourself.
You’d also avoid having a repossession on your records. This could affect your chances of getting a mortgage in the future.
If you want to put your home on the market speak to your lender to make sure you’re allowed to.
If the court has already granted your lender a reposession order, you cannot sell your home.
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Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
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