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What is a mortgage?

A mortgage is a loan that you use to buy a property.  You pay back the loan each month usually for 25-30 years. Interest is added to the amount you borrow so you pay back more than your original loan amount.

The amount of interest you pay depends on:

  • The length of the mortgage
  • The interest rate you’re on

The interest rate you’re on depends on:

  • The type of mortgage you choose
  • The size of your deposit
  • Your credit history 

Most mortgages have a reduced rate for a certain period, between 2 and 5 years After this time, the interest rates will increase.

This is the point that people tend to switch to another mortgage that has a reduced rate and this is called remortgaging.

If you do not keep up your mortgage payments, your lender could take your home from you which is called repossession. It would then become more difficult for you to get another mortgage in the future.



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