There are various types of mortgage available to cater for individual requirements. The main choices are repayment, where you pay off the capital as well as interest over the life of the mortgage, or interest only when you will still have the capital to repay at the end of the mortgage. Lenders generally offer variable rate, fixed rate - usually for a limited period of 2 or 3 years, or tracker mortgages linked to the bank lending rate. Make sure that you research thoroughly and always shop around for the best possible mortgage for your circumstances not just the lowest interest rate. If you go for a fixed rate deal always take account of the penalties you will face if you switch to a different lender or repay the mortgage during the fixed rate period.

The FSA regulates most mortgage sales in the UK and offers quality, independent advice helping you to make the best possible choice. The FSA Money Made Clear website is at www.moneymadeclear.fsa.gov.uk.

A 'mortgage' is a loan secured against your home. 'Secured' means that if you do not keep up the payments, the lender can sell your home to get its money back.  Remember: Your home may be repossessed if you do not keep up repayments on your mortgage.

How much should you borrow?
You can typically borrow up to three and-a-half times the main earner’s income before tax, plus one times any second earner’s income, or alternatively two-and-a-half times their joint incomes (if this is larger). Your mortgage lender may only count half of income such as overtime, commission or bonuses unless this is guaranteed. Mortgage lenders may reduce the amount they will lend if you have substantial outgoings such as other loan payments.

The credit crunch and the uncertainty in the UK housing market has resulted in lenders tightening up on their lending criteria including the amount that can be borrowed against a properties value. 100% mortgages are no longer available and most lenders require a deposit of 25% or more before they will lend to first time buyers. However, there are signs of stabilisation in UK house prices and with more funds becoming available some lenders now require a deposit of only 10%. It remains the case that the best interest rate deals will only be available for buyers with a bigger deposit.

Recently anyone with a tracker mortgage linked to the Bank of England base has seen their repayments fall substantially but interest rate increases will follow any economic recovery so tracker deals may now be less attractive than fixed or standard variable rate deals.

If you are getting advice, the adviser has a duty to take reasonable steps to ensure that you can afford any mortgage that he recommends. Whether you get advice or not, lenders are required to lend responsibly. This means that they should, based on things like your income, expenditure and other circumstances, consider whether you can keep up the mortgage repayments now and in the future; for example after an initial discount period comes to an end.

When you apply for a mortgage, your credit report is searched by the mortgage provider. It is essential for consumers to check their credit report. Inaccurate or out of date information may lead to customers receiving a higher interest rate (APR) or even being rejected by the provider.

Mortgage Repayment Problems

More and more home owners are finding difficulty keeping up with mortgage repayments especially when they face redundancy or sudden drop in earnings. Help is available for anyone who is facing difficulty worried keeping up with their mortgage repayments.

First of all do seek advice straight away, do not wait until it is too late. Start by contacting your mortgage lender - repossession should be a last resort and they will advise you on alternative payment arrangements that may be available.

Next you may wish to seek advice from the Citizens Advice Bureau. They also offer on-line advice on their website.

The government has also launched a number of assistance schemes.

If you are receiving income-related benefit such as Jobseeker’s Allowance You may be entitled to Support for Mortgage Interest as part of your benefit.

If you lose your job or suffer a drop in wages You may be able to get help from the Homeowner Mortgage Support Scheme.

If you are in serious difficulties and will become homeless if you are repossessed The Mortgage Rescue Scheme is for vulnerable families, like the elderly, disabled or those with children.

For more information about these schemes see the DirectGov website.

CreditExpert from Experian, the UK’s largest credit reference agency, enables consumers to check their own credit report online FREE for a trial period.

Click here for a useful article on how to deal with worries about your mortgage.

The new FSA Money Made Clear website offers free impartial advice on selecting a mortgage and can be found at www.moneymadeclear.fsa.gov.uk.

Find mortgage providers in the Business Directory

Try the mortgage calculator in Money Jungle Money Tools

Payment Protection Insurance

Payment Protection Insurance (PPI) can offer security and peace of mind but be sure to check that the cover offered is appropriate for your circumstances and make sure that you understand what the cover costs.

Columbus Direct believes in offering high quality, comprehensive Mortgage Payment Protection at low prices so you can ensure your home is protected should the worse happen and you are made unemployed or unable to work due to an accident or illness. And with their instant online quote coverage is easy to arrange.

Get a free quote today at Columbus Mortgage Protection

Missold MPPI?

Many people have paid for expensive payment protection insurance when taking out mortgages, only to find that a claim is turned because of exclusion clauses in the small print. PPI can add anything up to 50% to the cost of loans.

It may be that the terms where not fully explained or that the cover was unsuitable for an individual's circumstances. Anyone who feels that they were miss sold PPI should complain and seek compensation.

The first thing to do is to contact the company that sold you the policy and give them a chance to respond. If you are not satisfied your next port of call is the Financial Ombudsman Service. The Financial Ombudsman Service website includes helpful information and a fact sheet you can download. See also guidance on the FSA Money Made Clear website.

See also Buying a Home

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