Mortgages

[Alixw]

Can anyone explain the basics of a mortgage to me? I really dont understand them! Do you have to borrow the full amount your house would cost and then pay it all off monthly? How much of a mortgage would you be given with an income of around �34,000? And are there any websites that give you a quote without having to have them ring you back first? I just want a general idea!?

[Rach4018]

www.moneysupermarket.com

[Loosehead]

OK, mortgage is a loan secured on a house.

You want to buy a house, you do not have all the money so you must borrow some. There are many different scchemes but essentially they all do the same thing, that is repay the money, fictitious example:

You want to buy a house for �100,000 , you have �5000 deposit so you need to borrow �95000. This can be repaid over any period but usually it's monlthy over 25 years. The lender will charge you interest on this money, like saving except they are effectively saving with you so you must pay them interest at an agreed rate. Base rate is 4.75 you will probably get a discount initially but for simplicity lets say the rate they charge is 6% so they are lending you 95000 for 6% per year over 25 years, 300 monthly payments so you pay �612 per month for 300 months and the house is yours. There are lots of variables but thats basically how it works. You will be able to borrow 3-4 times you gross annual income, more if non status or self cert. hope this helps.

[kazza12345]

put simply, a mortgage is getting a loan to buy a house.  It works the same way as if you get a loan to buy a car.  If you failed to pay back a car loan, your car would be repossessed.  Same for house

[Alixw]

Thanks everybody, that helps a lot!