Getting A Mortgage

A mortgage is a long term loan to help you cover the cost of buying a house. Generally speaking, mortgage lenders will give between 75% and 95% of the total house value and ask you to provide the rest up front in the form of a deposit. You will also need to obtain life insurance to cover the cost of the lenders investment should you die. There are several types of mortgage to suit different individuals:

• Fixed rate mortgage - A good option if rates are low at the moment. Fixed periods from 1 to 10 years are possible.
• Variable rate mortgage - This will be affected by fluctuations in the Bank of England's Base Rate, but the extent depends on the lender. You can switch lenders with this type of mortgage.
• Interest only mortgage - You can often borrow more with this type of mortgage, as you only pay back the interest and not the loan itself.

How much can I borrow?

• If you are buying a house alone, you can generally borrow up to three times your annual salary. Though with a clean credit history and the right lender, loans of up to five times an individual's annual salary are becoming increasingly common.
• If you are buying as a couple, you can usually borrow three times the main income, plus one times the secondary income or two and a half times the total income.

Mortgage lenders will insist on a valuation of the property to ascertain the soundness of their investment. This is arranged by the lender but you must foot the bill. However, this is not to be confused with a detailed survey, which examines the structure and condition of the house. You may have the survey carried out by the same company taking care of the valuation or have it done separately. There are two types of survey:

• Full Structural Survey - This is advisable if it is an old house or you suspect there could be potential problems.
• House buyers report - Much cheaper than a structural survey, it checks the visible health of the house and can recommend specific further checks if necessary. Suitable for newer properties.

If everything turns out adequately and you obtain a mortgage agreement in principle, then you make an offer, usually through your estate agent. If this is accepted you move to the next stage of the house buying process.