What is a residential mortgage?

A residential mortgage is a loan taken out to purchase a residential property such as a house or a flat. This type of mortgage is secured against the property, which means that the lender has the right to repossess the property if the borrower fails to make their mortgage payments.

Most residential mortgages are arranged through banks or building societies. Typically, the borrower makes a down payment (known as a deposit) towards the purchase of the property, and then borrows the remaining amount from the lender. The mortgage is usually paid back over a period of 25–30 years, with regular monthly payments that include both the principal (the amount borrowed) and interest (the cost of borrowing).

There are different types of residential mortgages available, including fixed rate, variable rate, and tracker mortgages. The type of mortgage that is best suited for you will depend on your personal circumstances and financial situation.

Fixed rate mortgages offer a set interest rate for a specified period, which can help borrowers to budget and plan their finances. Variable rate mortgages have interest rates that can change over time, which can result in lower or higher monthly payments. Tracker mortgages have interest rates that track the Bank of England’s base rate, which means that monthly payments can go up and down depending on changes to the base rate.

Overall, a residential mortgage can be a great way to purchase a property. However, it’s important to carefully consider your options and make sure you choose a mortgage that is right for you. If you have any questions or need further information, do not hesitate to speak with Amaco Capital.