How much?

A mortgage is a type of loan used specifically to pay for a house or residential property. Few people have enough savings to buy a property in one go. This is why the majority of buyers take out a loan to help spread costs.

Mortgage loans are designed so they can be paid off over a period of time, usually around 25 years. How big a mortgage is, depends on how much money the mortgage lender is willing to give you. In general, mortgage loans are calculated at around three and a half times your yearly income. Or if the house is bought with a partner, mortgage loans are usually worth two and a half times your joint income.
Some mortgage providers are prepared to lend as much as four or five times that of your annual income. However whilst enabling you to buy the property you’ve always wanted, may seem attractive, it also represents a greater burden of debt.
How do you pay off your mortgage? You pay it off bit by bit every month. How much you pay depends upon the repayment method that you are undertaking. You will have the choice of whether to use repayment or interest only mortgage.  How much will you pay? Before you start repaying your mortgage, you will first have to put down a deposit on the property. Normally a deposit is worth 3% to 10% of the property’s asking price. There are additional costs which factor in the equation too. These include solicitors’ fees, valuation, arrangement and higher lending charges. Usually the cost of these administrative processes is about 1%-2 % of the asking price for the property. If your property is worth more than ₤120, 000 you will have to pay Stamp Duty Land Tax. Depending upon the price of your house, this is around 1%-4% of the asking price.
Interest rates have varied considerably over the years. They were as low as 4.99% in the 1950s, but also reached as much as 12.8 % in the 1980s. Over the past four years the base interest rate has averaged at 5.36 %.
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