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  • Writer's pictureScott Mackey

How does a mortgage work?

Updated: Jan 12, 2023

A mortgage is a loan that is taken out by a borrower to purchase a property. In the UK, mortgages are typically secured against the property, meaning that the lender has the right to take possession of the property if the borrower fails to make the required payments.


The process of obtaining a mortgage in the UK typically involves the following steps:

  1. Application: The borrower will need to complete a mortgage application with a lender or mortgage broker. This will typically involve providing information about their income, employment, credit history, and the property they wish to purchase.

  2. Approval: Once the application has been reviewed, the lender will make a decision on whether to approve the mortgage. This will typically be based on the borrower's creditworthiness and the value of the property.

  3. Underwriting: If the mortgage is approved, the lender will conduct an underwriting process to ensure that the borrower can afford the loan and that the property is suitable security. This may include an appraisal of the property.

  4. Closing: Once the lender is satisfied with the underwriting, the mortgage can be closed, and the funds are disbursed to the borrower. The borrower will then use the funds to purchase the property.

  5. Repayment: After the mortgage has been closed, the borrower will need to make regular payments to the lender, typically on a monthly basis, until the loan is fully repaid. The payments will typically include both the interest and the principal amount of the loan.

When taking a mortgage, there are several types of mortgages available in the UK, such as fixed-rate mortgages, adjustable-rate mortgages, and interest-only mortgages. The terms and conditions of each type of mortgage will vary and it's important to carefully research and compare different options to find the best deal that fits your personal circumstances.


Additionally, when considering a mortgage, it's important to consider the overall cost of the loan, including interest rates, fees and charges, and any early repayment charges.


In summary, a mortgage is a loan used to purchase a property and is typically secured against the property. The process of obtaining a mortgage in the UK involves completing an application, gaining approval, underwriting, closing, and repayment. There are several types of mortgages available and the terms and conditions of each type of mortgage will vary, so it's important to research and compare different options before making a decision.


If you would like to talk over this subject or any other with us, please feel free to get in touch windsor@legacy-finance.co.uk

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