Residential Mortgage
A residential mortgage is a loan specifically designed to help individuals purchase a home or remortgage an already owned residence. In this arrangement, the property itself serves as collateral for the loan. Borrowers typically repay the loan in monthly payments over a set period.
Key features of a residential mortgage include:
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Principal and Interest: Borrowers repay the amount borrowed (principal) plus interest, which is the cost of borrowing but sometimes borrowers want to look at interest only lending.
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Deposit or Equity Most mortgages require a down payment, which is a percentage of the home's purchase price that the borrower pays upfront.
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Interest Rates: Mortgages can have fixed rates (unchanging over the loan term) or adjustable rates (which can fluctuate based on market conditions).
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Terms: The loan is typically structured over a long term, like 15, 20, or 30 years, affecting monthly payments and total interest paid. This can be tailored to what works for you and your budget.
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Secured Loan: Since the mortgage is secured by the property, the lender holds a claim over the home until the loan is fully paid off. If the borrower misses payments, the lender may take steps to repossess the property to recover the remaining debt.
In short, a residential mortgage allows people to buy homes without having to pay the full purchase price upfront, but it comes with the responsibility of repaying the loan over time, plus interest.
Your home may be repossessed if you do not keep up repayments on your mortgage