What is a mortgage?
Let’s start with a dictionary definition of a mortgage:
“an agreement under which a person borrows money to buy property, esp a house”
[Taken from the
Collins English Dictionary]
In effect, a mortgage is a sum of money that we borrow in order to buy a home. It enables us to buy a property without having to save up the full amount of the purchase price. As the average house price in the UK is currently at around £235,000 (according to statistics from the Land Registry in England and Wales for January to March 2013), saving up this amount of money before purchasing a property would take a considerable amount of time.
Mortgages are often referred to as a ‘home-loans’ as they are in fact loans for homes. The sum of money needed to purchase a home is borrowed from a mortgage lender (a bank or building society) for a set amount of time – the normal duration being 25-30 years – during which time we (the mortgage borrowers) pay interest for the convenience of borrowing this money.
The mortgage, together with a deposit (money saved to put towards a house purchase) will allow us to purchase a property of our choosing.
What do mortgages mean to us?
A mortgage can mean different things to different people. On the negative side, mortgages can signify:
a scary unknown factor as it may be something that you have not encountered before
a monthly financial burden
a large debt for a long period of time
a constant worry over fluctuating interest rates and increasing payments.
On the positive side, mortgages suggest:
the chance to own our own home
an opportunity to lay down some roots
a time to put our own stamp on where we live
an option to make a house a home.
If you rent the property that you live in, you can sometimes feel as though you are not living in your own space. You can never make the home improvements that you could make to a property that was yours. You cannot improve the living space for you and your family that complements the way you wish to live.
In the UK, we are a nation that can sometimes seem preoccupied with becoming a homeowner. The majority of us, at some point in our lives, will have thoughts about purchasing our own home. But sometimes that thought, remains just that – a thought. This could be for a number of reasons:
you might think that you cannot afford to save enough for a deposit
you might think you don’t earn enough to be able to afford a mortgage
you might think that your credit history is not good enough
you might think that property prices in your area are out of your reach.
These thoughts, as well as others, may be stopping you from making the first steps towards achieving your dream of becoming a homeowner. With any goal in life, the better prepared we are, the more successful we will be. Research is important. Having the most accurate facts, figures and information can help us to make the right decisions.
Whatever your reason for thinking that owning a house is not a reality for you, stop thinking and start doing. Arm yourself with information – contact us and let us help you. We can explain the mortgage process and we can help you on your journey towards becoming a property owner. If you live within the Cardiff area we can arrange a face to face meeting to discuss your mortgage needs.