Mister Write and Torquil Clark

The 'no more than you need to know guide' to mortgages

Just another milestone…

People who arranged their first mortgage back in the dim and distant can easily forget just how important a matter it can be and how daunting it feels when you embark on the process. Will your application be accepted? What will ‘they’ need to know? How long is at all going take? Why does there need to be so many people involved? They’re just some of the questions and concerns that everyone has when they decide to take on the responsibility of a mortgage.

In a way, it’s not unlike the moment you leave your parental home and start paying rent; it’s a strange combination of anxiety and expectation! So the first thing to say about mortgages is that most people feel exactly the same about them as you probably do now.

Everyone wants it to happen

What does seem to complicate the process is the number of people involved. There’s you the buyer, the seller, the estate agent, the building society, your solicitors, the seller’s solicitors, the surveyor and of course ourselves. Believe it or not, each has their own vital role to play. But the really important thing to remember is this: everyone involved wants to make sure that you get your mortgage – nobody is working against anyone else. Sellers are as keen to sell buyers are to buy!

The world is your oyster

Until quite recently, applying for a mortgage was looked on as something of a ‘black art’. The only option most people had was to go to the building society, complete the application form and then wait with baited breath for a ‘yes’ or a ‘no’. That’s no longer the case. Now there are many different types of lenders; some lender specialise in certain kinds of mortgages whilst others prefer a particular type of borrower. Furthermore, lenders are much more flexible in terms of their demands – almost anyone who can prove an income will now be considered for a mortgage. And the number of sources of mortgage finance just keeps on growing and growing. Which is good news for borrowers. Because what all that competition means, is that buyers are in the best position ever to get exactly the mortgage they need – providing you know what you’re looking for. Are you confident that you can sort the wheat from the chaff and find exactly the right mortgage for you? If you have any doubt, please talk to us. Because when it comes to sorting out your mortgage, we can help you in so many ways.

We can do it all for you

As mentioned earlier, there are lenders everywhere. In fact, so many of them that it can be difficult, if not impossible, to pick one out from the herd. But we can – and that’s not all we’ll do for you. Once we find the right lender, you’ll almost certainly have a choice of how you repay your mortgage. Again, we can help you make that decision. In fact you can depend on us to be with you right from the start, and up to the day the property becomes yours. We’ll chase everyone involved, explain what you want explaining and keep you informed on progress. By handing the matter over to us, you can get on with the other important things in your life. For further details of our mortgage management service, please see page XX.

Pay as you go, or pay at the end?

When you take out a loan, any kind of loan, the lender will charge you interest. The same is true of a mortgage. But unlike most other loans you have a choice of how you repay the original amount (the capital) you borrowed. You can do that as you go along, or you can leave repaying the capital to the end of the loan period (the term). A mortgage where you repay some of the loan every month is called a ‘capital and interest mortgage’ and a mortgage where you repay the loan at the end of the term is called an ‘interest only mortgage’.

How a capital and interest mortgage works

Some of your monthly repayment is used to pay the interest and some is used to reduce the original amount (the capital) you borrowed. In the early years of the mortgage, the bulk of your monthly repayment goes towards paying the interest; in the later years the interest charges reduce and more of your repayment is available to reduce the capital. The advantage with this kind of mortgage is that you can be sure that the mortgage will be repaid in full – providing of course you make all the repayments on time.