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How Mortgages Work 

A mortgage is a loan made by a bank or building society to enable you to buy a house or other type of property. The length of the mortgage will usually be anything up to 25 years for a standard repayment mortgage. The shorter the term, the more you will repay each month, but you will obviously pay off the mortgage more quickly. Interest-only mortgages can usually be anything up to 40 years. When you sign the mortgage agreement, you are agreeing to give the property as security for the loan. 
 
Vickers young mortgage guide we are pleased to announce our new mortgage guide,  
which is downloadable and designed to help you understand more about the mortgage process. 
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY.  
YOUR HOME OR PROPERTY MAYBE REPOSSESSED IF YOU DO NOT KEEP UP ON REPAYMENTS ON YOUR  
MORTGAGE OR ANY OTHER DEPT SECURED ON IT. 
The amount you borrow is referred to as the capital sum. The lender then charges you interest on the amount you have borrowed. When it comes to monthly repayments, these can be interest and capital, referred to as a repayment mortgage, or just interest, referred to as an interest-only mortgage. In addition, some lenders offer mortgages on a part-repayment and part interest-only basis. 

MORTGAGE TYPES 

Fixed rate mortgage 
 
The interest you pay remains the same for a set period of time, so your mortgage repayments will remain the same, even if rates rise. 
Tracker mortgage 
 
A type of variable rate mortgage. Here the interest rate usually tracks the Bank of England base rate at a set margin above or below it, for the period of the deal. 
Variable rate mortgage 
 
As the name suggests, the rate applied can change at any time, meaning that your monthly repayments could do so too. 
Discount mortgage 
 
A type of variable rate mortgage where the interest rate is set at a discount below the lender’s SVR for a fixed period of time. 
Standard variable rate mortgage 
 
The interest rate used here is the lender’s default rate, their standard variable rate (SVR). This can change at any time, meaning that your monthly repayments could go up and down. 
Capped-rate mortgage 
 
The rate you will be charged moves in line with the lender’s SVR, but the cap means that the rate won’t move above a certain level. 
REPAYING YOUR MORTGAGE: Once you have a mortgage in place, you’ll be making regular monthly repayments until the end of the mortgage term, or until you decide to move or take out a new loan. However, lenders do offer a certain amount of flexibility when it comes to the amount you pay each month; an adviser will be able to explain the options available to you. 
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