Mortgage
A mortgage is a loan used to buy a home.
What it means
A mortgage is a loan used to buy a home. Instead of paying the full purchase price upfront, you borrow money from a lender (usually a bank) and repay it over an agreed period, usually 25 to 35 years. As well as repaying what you borrowed, you'll normally pay interest, which is the cost of borrowing the money.
You buy a £300,000 home with a 10% deposit (£30,000). The mortgage provided by the bank is the remaining £270,000, which you repay through monthly payments.
Why it matters
For most people, a mortgage is the biggest financial commitment they'll ever make.
Even a small difference in your mortgage interest rate can change the total amount you repay by thousands of pounds over the life of the loan.
Do I need a 20% deposit to get a mortgage?
No. Many lenders accept smaller deposits; even as low as 5%. It's worth noting that the size of deposit may impact the interest rate offered.