Whether you are thinking about buying your very first property or you are planning on moving up the property ladder, you will probably have to think about taking out a mortgage. Though most people have a vague idea of what a mortgage is, very few fully understand how they work and why most buyers need one. To help you out, we have answered some of the most frequently asked mortgage questions.
Mortgage FAQs You Want Answered
- What Is A Mortgage? – There are very few people out there who have the money to buy a property outright, which is why mortgages are extremely popular. A mortgage is a type of loan that is taken out to buy property or land. It is secured against the value of the property or land being purchased until the total amount is paid off.
- Are There Different Types of Mortgages? – Yes, there are two main types of mortgages. A Fixed Rate Mortgage offers a fixed interest rate for a predetermined period of time, which is usually two or five years. The repayments you make do not change until this period of time comes to an end. A Variable Rate Mortgage offers a varying interest rate, which means that the repayments you make can change over time.
- How Much Can I Borrow? – There is no set amount in regards to how much you can borrow for a mortgage, as lenders calculate things differently and have a slightly different approach. Lenders will calculate how much you can borrow using the cost of the property you want to buy, how much you have as a deposit, your income and what you can realistically afford.
- How Long Does a Mortgage Last? – The length of a mortgage depends on how much you borrow in the first place and what you can afford. If you borrow less and pay off a lot each month, you may only have a mortgage for a short amount of time. This is because you will pay off the loan quickly. If you borrow more and your repayments are relatively low, you will have the mortgage for a lot longer as it will take longer to repay the loan.
At Hawke Financial Services, we are on hand to guide you through the sometimes complex mortgage process. If you have a mortgage question you need answered or you need professional mortgage advice, you can rely on us. Contact us today to speak to an expert.