What is a mortgage?

A mortgage is a loan given by a lender to an individual or business for the purpose of buying a home. The loan is secured against the property, meaning that if the borrower defaults on their payments, the lender can repossess and sell the house in order to recover the loan amount.

Mortgages are generally long-term loans with repayment schedules (also known as the “term” of the mortgage) lasting anywhere from 5 to 40 years depending on the borrower’s circumstances and plans.

In order to get a mortgage, the borrower is typically required to provide anywhere between 5% – 20% of the property value as a “deposit”, which serves as collateral against a default.

It is important to note that any amount offered above the property valuation will need to be funded entirely by the borrower.

There may also be other fees and taxes associated with a property purchase, such as mortgage application fees, stamp duty (see: stamp duty) and legal fees, some of which can be added to the mortgage, but some of which will need to be paid upfront.

Mortgage repayments will typically occur on a monthly basis and can fluctuate depending on the type of mortgage product that has been chosen and on market conditions.

It’s important to shop around when looking for a mortgage, as rates and fees can vary significantly from one lender to another. A mortgage broker will be able to look at a wide range of mortgage deals simultaneously and help narrow down the choices of the most suitable options available to you.

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