Mortgage costs

What types of mortgages are there?

Mortgages are loans. They allow you to borrow an amount of money and pay it back over a number of years. The lender (who is usually a bank or building society) makes money by charging you 'interest'. So the amount you pay back is usually a mixture of money to pay off the original loan plus money to give some 'interest' to the lender.

There are lots of different types of mortgages available and the choice can be a bit mind-boggling. You are advised to do some research on the different types of mortgages available, and work out the pros and cons of each. Remember that a mortgage is a big responsibility and it is worth shopping around. What looks cheapest in the short term is not always cheapest in the long term - and mortgages are usually a long-term responsibility. There are different risks attached to different mortgages, so make sure that you are clear about these before deciding which one to go for.

Most of the popular newspapers have money sections at least once a week that include information on 'mortgage best buys'. The Consumer Association produces a WHICH? Guide to mortgages that should be available in your local library. You can get advice from a financial adviser or mortgage broker. This advice can be free, but check that it is independent. Advisers usually make a living from commission for selling people mortgages or other related products like life insurance. Be aware that they may try to encourage you to buy products that will earn them the most commission, rather than what is best for you.

If you are buying through a Low Cost Home Ownership scheme, you will have less choice about the type of mortgage or lender. Ask the housing association or council you are buying through about the options available to you.

To find more advice about mortgages click on:

• www.whatmortgageonline.co.uk
• www.moneyfacts.co.uk
• www.nacab.org.uk
• www.housingoptions.org.uk/factsheets/9-mortgages.htm
  (advice for people with a learning disability who wish to buy)

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How much will they cost to repay?

How much you will have to pay each month off your mortgage will depend on:

• How much you want to borrow
• The type of mortgage you take out
• How long you take to pay the loan off
• What interest rate your lender is charging you

Lots of lenders or brokers have mortgage calculators built into their websites that help you calculate how much a mortgage will cost each month to repay, as well as how much lenders might be willing to lend you. If you know what interest rate you'll be paying, you can find one of the easiest to use by clicking on www.bbc.co.uk/homes/property/mortgage_calculator/.

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Who can get a mortgage?

There are lots of established banks and building societies that might be willing to give you a mortgage. Before deciding to lend to you they will want to check:

• Your income and whether you are in regular work
• Your savings
• Your other financial commitments (e.g. fines or other loans)
• Your previous history of paying off loans

If they think it likely that you will be able to keep up your mortgage repayments they may be willing to lend you up to three times your income as a single person, or two and a half times the income of a couple. If they think there is a risk that you may not be able to keep up the mortgage repayments (for instance because you do not have a history of regular work), they may still be willing to give you a mortgage - but not for the full price of the property or may want you to take out insurance against job loss.

Beware of getting a loan or mortgage from a company that claims to lend to people who have been refused by banks or building societies. There are a lot of 'loan sharks' about and you should make sure that you read and understand the 'small print' of any loan offer from such companies.

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If you are disabled

If you are disabled it might be possible to claim income support or other benefits to cover your mortgage repayments right from the start. More information can be found in www.housingoptions.org.uk/factsheets/8-income-support.htm.

The lender will want to know that the person taking out the mortgage has the ability to enter into a contract and understand what it means for them. This can create obstacles for some people with a learning disability. There are ways around this however. Housing Options is an independent advisory service for people with learning disabilities, their relatives and carers that can provide advice in these circumstances. Further information is available by clicking on www.housingoptions.org.uk/factsheets/7-housing-the-rights.htm, or by contacting Housing Options at:

78a High Street
Witney
Oxon OX28 6HL
Telephone: 01993 705012

You can see their website by clicking on www.housingoptions.org.uk.

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