A residential mortgage is a loan secured on a property you plan to live in. If you are looking for a loan on a property you want to let out or a property you want to run a business from, please take a look at our Buy-to-Let or Commercial Mortgage sections.
At Connect, we can help you get a residential loan to purchase your new home, whether you are a first-time buyer or a home mover. If you are an existing homeowner not looking to move, we may be able to help you switch to a better interest rate or raise capital for a range of uses.
As well as helping find the most competitive rates from the high street, we can help with complex circumstances with access to over 170+ lenders.
How Does a Residential Mortgage Work?
Obtaining a residential mortgage typically involves the borrower providing a deposit, usually around 10% of the property’s value, which serves as security for the loan.
The funds are used to purchase or refinance a property, with repayment terms agreed upon between the lender and borrower. Residential mortgages are often referred to as ‘First Charge Mortgages’ because the lender holds the primary legal claim on the property. If the borrower defaults on payments, the lender has the legal right to repossess the property to recover the loan.
Key points about residential mortgages include:
- Loan Terms: Most mortgages run for 25 years, but shorter or longer terms, up to 40 years, are available. Shorter terms typically result in higher monthly payments if repaying the capital.
- Interest Rates: Rates can range from 1% to 9%, depending on the product. For context, Statista data shows average rates in 2022 were 3.17% for 2-year fixed-rate mortgages and 4.68% for 5-year fixed rates.
- Deposits and Loan-to-Value (LTV): A larger deposit often secures better interest rates, as it lowers the lender’s risk. Maximum LTV usually falls between 90-95% of the property’s value.
- Early Repayment Charges (ERCs): Borrowers may incur fees if they repay their mortgage early. ERCs depend on the loan amount, the remaining term, and the terms of the product rate chosen. These terms are outlined in the loan agreement.
Residential mortgages provide a structured way for borrowers to acquire property while balancing repayment obligations within agreed terms.
Ready to move home?
If you have decided now is the time to move home, we can help you. Many clients think that their existing mortgage lender will be the best place to go, but with over 170 lenders on our panel, contact us to ensure you get the very best next mortgage deal for your circumstances.
Select from the following to find out more:
Our advisers can:
- Work out how much you can afford to borrow
- Search the whole of the market to find competitive deals
- Recommend which mortgage best fits your needs/circumstances and what it’ll cost
- Help you with the whole application process
What next?
We will come back to you quickly to let you know how we can help. If you would like to speak to us immediately, call us on 01708 676 111.
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