What does a mortgage rate actually mean?
Lenders e.g. Northern Rock, Halifax, Alliance and Leicester, etc do not give away free money, so that means they will charge you interest on the money your borrow!

All lenders have their own rate and this goes up and down often in line with the Bank of England’s base rate. Naturally, the higher the mortgage rate, the higher the amount of interest will be that you have to pay.

There are various kinds of mortgage types on offer e.g. you can get fixed or discounted interest rates rather than a standard rate. This might save you money at the start but you may also be committed to staying with the mortgage lender once the deal ends – a mortgage advisor will help you navigate the mortgage maze and as long as they are FSA regulated will provide impartial advice.



How long are mortgages usually for?
Mortgages have traditionally been for 25 years but it's fairly common for them to be anywhere between 15 – 30 years now.

Clearing your mortgage as quickly as possible means you will save yourself more money in the long term by paying less interest.


How much do I have to pay for the deposit?
A deposit is often between 5% - 10% of the purchase price of the property. (I.e. £10,000 to £20,000 on a £200,000 property.

The bigger your deposit, often the better the mortgage deal. It is possible to get 100% (and sometimes even higher) mortgages however the rate will not be as competitive.


How much do I have to pay each month?
This of course depends on many factors such as what kind of mortgage it is, how much you want to borrow, over what period, are there any ‘hidden charges’, etc however as an idea we have given the below example…

Say, as an example, you want to purchase a property that is worth £150,000.

If you put down a 10% deposit, it will leave you with a mortgage of £135,000.

If you can secure a fixed rate of say 4.99%, you can expect to pay about £785 a month for a repayment mortgage and £560 for an interest-only mortgage.

A 1% rate rise would add another £100 a month to the interest payment on this loan.