Mortgage Guide

Need help understanding mortgages? You’re in the right place. Our mortgage guide will take you through some basic terminology, different types of mortgages, and our application process. And if you need anything else, our trained advisors will be happy to give advice over the phone.

Mortgage basics

When you apply for a mortgage, you might come across words and phrases you’re unfamiliar with. That’s ok – we’re here to help. We’ve listed some common terms here, but you’ll find more in our mortgages jargon buster

Deposit

Your deposit is a certain amount of money that you pay upfront towards the cost of the property. The rest will be covered by your mortgage.

This is one instance when bigger really does mean better. In general, the more deposit you have, the greater the range of mortgages that will be available.

Capital

Capital is the amount of money you borrow from us to pay for the property. Unless you choose an interest only mortgage, you’ll pay back some of this capital every month through your mortgage payments.

Interest

Interest is the amount you pay for borrowing your mortgage capital. This amount varies from mortgage to mortgage. You’ll pay off some of the interest you accrue every month through your mortgage payments.

Loan to value (LTV)

This is the amount you’re borrowing in relation to the cost of the property. It shows how much you’ll need to put down as a deposit to get a particular interest rate.

For example, let’s say you want to buy a house for £100,000. To get a 95% LTV mortgage, you’d need to put down a 5% deposit – so your deposit would be £5,000. Or to get a 75% LTV mortgage, you’d need to put down a 25% deposit, which would be £25,000.

Generally, the bigger your deposit, the better deal you can expect on the interest rate. Watch out for fees and other costs though. They can still affect how much you pay overall.

Standard Variable Rate (SVR)

This is our base lending rate. Each lender sets their own SVR – it isn’t the same thing as the Bank of England base rate.

If you take out a fixed, tracker or discount mortgage with us, you’ll usually be transferred to our SVR when the deal ends (unless otherwise stated in the product details).

Types of mortgage

It’s important to choose a mortgage that’s right for you and your circumstances. These are some of the different types we offer, and what they might mean for you.

Fixed rate

With a fixed rate mortgage, your interest rate will stay the same for a set period of time. You’ll know exactly how much you’re paying each month.

During this set time period, your rate won’t change based on the Bank of England’s base rate. So even if the base rate goes up, your payments will stay the same. But this also means that your payments won’t go down, even if the base rate decreases.

Bear in mind that some fixed rate mortgages include early repayment charges. At the end of your fixed rate period, your mortgage will usually be transferred automatically to our Standard Variable Rate (SVR).

Variable Rate

With a variable rate mortgage, your interest rate and monthly payments could go up or down at any point.

Buy to Let

Buy to Let mortgages are designed for people who are buying or remortgaging a property to rent out to others.

Shared Ownership

Shared Ownership offers you the chance to buy a share of a property, and then pay rent on the remaining share. It could significantly reduce the size of your required deposit, making it an option for getting your foot on the property ladder.

Interest only

With an interest only mortgage, your monthly payments only go towards paying off the interest on the amount you’ve borrowed. Then at the end of the mortgage term, you’ll repay the full amount borrowed. You’d be expected to have a credible repayment strategy in place, showing how you’d repay the loan at this point.

Applying for a mortgage

We know that applying for a mortgage is a big decision. So we’re here to help you get it right. Here are a few things you can do to prepare for your application.

Fees and charges

First of all, make sure you budget for your mortgage fees and charges. We always list these separately – don’t forget to check out the terms of each product to see what other fees and charges are payable.

Fees can include application fees, valuation charges and arrangement fees. Also, don’t forget to check whether your mortgage is subject to any early repayment charge and/or a mortgage exit fee, in case you plan to pay yours off early.

Keep an eye out for our special discount mortgages which offer discounted fees and free valuations, to help keep the costs of buying your home as low as possible.

Approval in Principle (AIP)

Before you make a full application, you might want to get an Approval in Principle (also known as a Decision in Principle, Agreement in Principle or Mortgage Promise). This lets you find out if we may be able to lend to you. It’s free and there’s no obligation to take a mortgage with us afterwards.

An Agreement in Principle also gives you a good idea of the type of property you may be able to afford, based on your income and outgoings. Estate agents sometimes ask for these, to show you’re serious about buying.

Documents

When you apply for a mortgage with us, you’ll need to provide some supporting documents and information. Go to our Application Requirement Guide for more details on what you’ll need.

If we need any other documents to progress and underwrite your application, we’ll let you know.

Handy calculators

Before you apply, try using our calculators to see what your monthly payments might be, or how much you could borrow.

The mortgaged property (which may be your home) may be repossessed if you don’t keep up repayments on your mortgage.