A mortgage is a form of a loan that is specific for the purchasing, building, or maintaining of a property. The borrower agrees to pay the loan back over a period of time, most common mortgages repayments happening on a monthly basis. The property itself serves as collateral for the loan and the type of loan will determine the cost of the mortgage and interest rate. Businesses and individuals use mortgages to buy real estate without paying the full price upfront; the buyer usually only has to place a deposit upfront and then has to pay instalments of the total sum plus interest over a number of years, until the property is fully owned and cleared.Â
The process to apply for a mortgage is for the buyer to apply for one or more lenders. The lender will then ask for financial details such as employment status and recent tax returns in order to understand if the buyer will be able to repay the mortgage. The lender will generally apply for a credit check as well.
See more: Your Credit File: What Lenders need to know
