A mortgage is a loan used to purchase property, typically a house or flat. It is a long-term loan that is secured against the property being purchased.
The mortgage is typically repaid over 25-30 years, with regular monthly payments that include the principal amount borrowed and the interest the lender charges. The interest rate can be fixed or variable, depending on the terms of the mortgage agreement.
With a fixed-rate mortgage, you’ll pay the same amount each month regardless of any changes in the Bank of England’s base interest rate or the lender’s variable rate.
In contrast, variable-rate mortgages have a rate that can fluctuate, so your monthly mortgage payments will vary.
To qualify for a mortgage, borrowers must meet specific eligibility criteria, including a good credit score and a steady income. Lenders also typically require a deposit, a percentage of the property’s purchase price.
If the borrower fails to make the monthly mortgage payments. In that case, the lender may repossess the property and sell it to recover losses. Therefore, it’s essential for borrowers to carefully consider their financial circumstances and ability to make repayments before taking out a mortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage
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The information contained within was correct at the time of publication but is subject to change.