Mortgages Explained
A plain-English guide to the biggest loan most people ever take out.
A mortgage can last longer than most car loans, phone contracts and jobs put together, so it pays to understand exactly what you are signing. This guide clears up the common myths, explains the jargon, and shows where to get proper advice.
Mortgage Myths, Busted
"You have to live in the UK."
Not always. Some lenders specialise in British expats and foreign nationals buying here, although the choice is narrower.
"Nobody does 100% mortgages."
A few do. A small number of lenders offer mortgages with no deposit, but most still ask for at least 5% of the price.
"You can only borrow 4 times your salary."
There is no single legal limit. Around 4.5 times income is common, and some lenders go to 5.5 or even 6 times for certain applicants.
"You can still self-certify your income."
No. Self-certified mortgages have been banned in the UK since 2014. Every lender now has to verify your income.
"You're too old for a mortgage after 65."
Not any more. Lenders have relaxed, and some will now lend to people who will be 85 or older when the mortgage ends.
The Words You'll Hear
- Repayment
- Each monthly payment covers interest and part of the loan, so the debt is cleared by the end of the term.
- Interest-only
- You pay just the interest each month and still owe the full amount at the end, so you need a plan to repay it.
- Fixed rate
- Your rate stays the same for a set period, often two or five years, whatever happens to interest rates.
- Tracker
- Your rate moves up and down with the Bank of England base rate, so payments can change.
- LTV (loan to value)
- How much you borrow compared with the home's value. A lower LTV usually unlocks a lower rate.
- Decision in principle
- A lender's early indication of how much it might lend, usually given before you find a property.
Before You Sign
- Read every part of the mortgage offer, and ask the lender or your adviser about anything you don't fully understand.
- Compare deals on their total cost over the fixed period, including arrangement fees, not just the headline rate.
- Use a mortgage calculator to see the monthly payment at today's rate, and again at a higher one.
- Check the rules on overpaying. Many deals let you overpay a set amount each year, but going over it can bring an early repayment charge.
For free, impartial guides and calculators, MoneyHelper's home buying section is a good place to start.
Mortgage Questions
Does Quick Loans arrange mortgages?
Not any more. Quick Loans now arranges unsecured personal loans only. If you are looking for a mortgage, speak to a qualified mortgage adviser, or go directly to a bank or building society.
Is a mortgage broker the same as a loan broker?
No. The word means something different in each market. A mortgage broker is a qualified adviser who has passed exams and recommends a deal for you. In the unsecured loan market, a "broker" like Quick Loans is really a credit intermediary, passing your application to lenders rather than advising you. Mortgages run for decades, so the extra expertise matters.
Should I pay a mortgage broker upfront?
Our view is that you shouldn't need to. Be wary of brokers who charge whether or not your mortgage goes ahead, or who charge simply for getting you an offer – there are stories of offers so poor they were never realistic, with the fee still owed. A broker who is only paid when your mortgage completes has every reason to find you a deal that works.
How long does a mortgage take?
A decision in principle can take minutes. A full mortgage offer, once your documents have been checked, often takes a few weeks. After that, the timing usually depends on the solicitors finishing their checks before the money is released.
Is QuickMortgages.co.uk part of Quick Loans?
Yes, QuickMortgages.co.uk is one of our brands. It hasn't been launched yet.
Where is Self Cert Mortgages (SelfCert.co.uk)?
The occurrence of Brexit marked a significant turning point for the financial landscape, particularly in the context of lending between the UK and the European Economic Area (EEA). The UK's departure from the EEA rendered lending from another jurisdiction back to the UK unfeasible. The obstacles posed by both Brexit and stringent regulations from the Czech National Bank made the project challenging and ultimately unviable.
The project, initiated in 2016, aimed to demonstrate the viability of a theory wherein private lenders and borrowers could engage in mutually beneficial transactions. Despite the initial goal, various factors, including anti-competitive bureaucracy and regulatory challenges, contributed to the project's ultimate discontinuation. The project highlighted the complexities and hurdles associated with going up against a cartel of regulators determined to stop real free market competition.