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Mortgages Explained

Published: 05 September 2014

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Author: Carl Shave - CEO and co-founder
Last updated: 30May2024

Considering it’s a financial commitment that so many people enter into at some point in their lives, it is perhaps strange that most of us when growing up never have mortgages explained to us in any great detail. This may be one of the reasons why so many people find applying for their mortgage such a nerve-wracking experience.

What is a Mortgage?

On one level, a mortgage is quite straightforward – it is a loan given to someone by a lender (usually a bank or building society) for the purchase of a property. Usually, that’s a house or flat, but commercial mortgages are also available for businesses to buy shop premises, offices, and so on. The lender charges interest on the amount loaned, and the mortgage holder has to make monthly payments to cover either just the interest (in the case of interest-only mortgages) or the interest and paying off the mortgage loan (for repayment mortgages).

How does a Mortgage Differ from a Loan?

The difference between a mortgage and other types of loan is that the lending is secured against the property. Lenders and solicitors may refer to this as a legal “charge” (or a “standard security” in Scotland). This means that the mortgage holder is the legal owner of the property as long as they adhere to the terms and conditions of the mortgage agreement, but if the householder breaks the conditions of the loan (such as failing to make the agreed mortgage payments) then the lender has a legal right to take possession of the property.


Speak to one of our expert mortgage advisors if you have any further questions about mortgages, getting the best deal and of course picking the right product for you – get in touch today!