Mortgages, explained

How a deposit works

A deposit is the share of a property’s price you pay yourself, and the mortgage covers the rest. It is usually described the other way round, as loan-to-value: put down 10% and you are borrowing at 90% LTV.

Deposit size matters for more than the sum borrowed. Lenders price in bands, so crossing from one band into the next, 90% to 85% say, can change the rate available, which is why the gap between a deposit you have and the next band down is often the most useful number to know.

A deposit is also not the only cash needed. Legal fees, searches, a survey and, above a threshold, Stamp Duty are paid separately, and they are a common reason a budget that looked ready turns out not to be.

What affordability means

Affordability is the lender’s assessment of whether repayments are sustainable for you. It considers income, what you already pay for such as loans and credit cards, dependants and regular outgoings, and it is stress-tested against interest rates being higher than they are today.

This is why two households with the same income can be offered very different amounts. Committed monthly spending changes the picture as much as salary does.

Only a lender or a regulated mortgage adviser can tell you what you could borrow. Wisemium does not assess affordability, and nothing here should be read as an indication of what any lender would offer.

Remortgaging

Most mortgages start on a fixed or discounted rate for a set period, then move to the lender’s standard variable rate, which is usually higher. Remortgaging means moving to a new deal, either with the same lender or a different one, around the point that period ends.

The date the initial period ends is the thing worth knowing well in advance, because deals can often be reserved some months ahead. A renewal date that passes unnoticed is one of the more expensive things to miss in a household budget.

Moving home costs beyond the mortgage

The mortgage is the largest number, but rarely the only one. Removals, overlapping rent or mortgage payments, cleaning, and setting up services at the new address all land in the same few weeks.

Bills are the part that quietly follows you. Broadband may need a new contract or may move with you, energy needs a meter reading on the day, council tax changes with the band, and water depends on the supplier for the new address.

Home insurance is the one most often left until after the move. Buildings cover is usually required from the day contracts exchange rather than the day you collect the keys, and contents cover follows your belongings, so both are worth settling before moving day rather than after it.

If you are buying for the first time

The sequence usually runs: build a deposit, understand what you can sustainably repay, get a decision in principle, then look seriously at properties. Doing it in that order avoids falling for something outside reach.

For the decisions themselves, how much to borrow, which product, which lender, speak to a regulated mortgage adviser. That is a regulated activity, and it is not something Wisemium does.