What is a residential mortgage? A residential mortgage is any mortgage used to buy a residential (not commercial or rental) property.Unlike traditional loans, residential mortgages have a built-in collateral – the property itself.

This means that if you default on your mortgage, the lender can seize your home.It also means that the maximum you can borrow isn’t just dependent on how much you can afford but the value of the property itself. If you overbid on a residential property, the bank may reject your mortgage application.

Your dedicated residential mortgage advisor can help you understand your options and works hard to bring you as many mortgage offers from lenders as possible so that you can select the best one for you.

There are many different types of residential mortgages, and your residential mortgage broker can help you find the best options for each one.

• • Fixed rate: You agree to a fixed interest rate for 2, 3, or 5 years (occasionally, you’ll find offers for 10 years).
  • Variable rate: You pay the Standard Variable Rate (SVR). This usually happens automatically when your fixed rate ends until you remortgage.
  • Tracker rate: Your interest rate tracks the Bank of England’s base rate. You’ll also pay a small percentage on top to your lender.
  • Discounted variable rate: You may get a discount on a variable rate mortgage from some lenders.
  • Offset: A unique mortgage that’s linked to your current and savings accounts. For example, say you have a £100,000 mortgage and £10,000 in savings. With an offset mortgage, you only pay interest on £90,000.
  • Interest only: During your mortgage term, you only pay interest. Once the term ends, you need to pay the full amount.

Yes, you can either port your existing mortgage if the property you are moving to is of similar value, or you can get a new one.

If you’re moving into a larger or more expensive home, you may need to get a second residential mortgage. You can learn more about this option in our can I have two residential mortgages guide.

Residential mortgages are determined based on these criteria:

1. Your combined income
2. Your credit score and history
3. Your deposit amount
4. Your debt-to-income ratio
5. Your employment status

This doesn’t mean that you can’t get a mortgage as a freelancer, entrepreneur, or investor; you’ll just need a residential mortgage broker who understands your situation and can help you better adjust your mortgage application.

There are a lot of costs involved with buying a home. Many need to be paid upfront, so be prepared to pay these costs when you start house hunting:

1. The deposit
2. Arrangement fees
3. Valuation fees
4. Legal fees
5. Stamp duty
6. Moving costs

Once you move in, you’ll also need to start paying your residential mortgage rates and insurance, at minimum. To cover these costs, try to create a savings nest egg specifically for the first months as a homeowner.

You can repay your loan in one of three ways:

1. Make your monthly payments
2. Make overpayments (if your mortgage agreement allows)
3. Pay your mortgage off early and pay the early repayment charges (ERC)

On top of finding you the most attractive residential mortgage rates for your circumstances, residential mortgage brokers can also help negotiate more attractive overpayment agreements if you plan on trying to pay off your mortgage sooner.