What to consider when taking out a mortgage

For most, a mortgage is the key to buying your own home. It’s also probably the biggest financial commitment you'll ever make. As part of our commitment to helping you make an informed decision, here are some things to consider when you take out a mortgage.

• What are the benefits of a mortgage?
• What commitment do I need to make?
• What else should I think about before I commit?
• Are there any risks?
• What else should I consider?

What are the benefits of a mortgage?

It helps you to own your own home! Also, unlike renting, owning your home can be a significant investment as house values have historically increased. If the value of your home does increase you get ‘equity’ that can be used to climb the property ladder or to make home improvements.

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What commitment do I need to make?

Your biggest commitment is to make your mortgage repayments. We’ll work with you to ensure you can afford them. So you’ll need to give us personal details like all your monthly outgoings.  We’ll also check your credit history with a credit reference agency.

As with any other loan, you pay interest on your mortgage. The amount you repay depends on your deal and how long you take to pay back your mortgage. The longer you take the more interest you pay over the life of the loan.

We'll provide a Key Facts Illustration with a breakdown of your deal including any fees. If you choose a deal with Early Repayment Charges you will pay a fee if you switch to another deal or leave us during a fixed period. If you choose a deal with an product fee you can pay this upfront or add it to your loan and pay interest. If you borrow over 90% of the Loan to Value of the property, you may incur a Higher Lending Charge. There may also be other fees on certain products, make sure you ask before you buy.

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What else should I think about before I commit?

You can repay the mortgage in one of two ways:

• Repayment mortgages – each month you pay off part of your mortgage and interest.
• Interest-only mortgages – you only pay the interest on your mortgage not the mortgage itself. Although your monthly payments are lower, you must have enough money to repay the full amount borrowed at the end of the term; for example, with an investment or savings plan.

Consider how you’ll cope if your repayments were to increase, for example, if there were any change to the interest rate. Also, what will you do if your circumstances change, for example, if you lose your job? We can discuss ways to protect you and your mortgage.

As a homeowner you’re also responsible for your home’s upkeep and repairs. So ensure you have enough money available and consider insurance.

We can offer you two levels of service; arranging your mortgage with or without advice. We’ll only tell you about our products and services.

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Are there any risks?

A mortgage has one key difference to other loans – it is secured against your home. If you can’t keep up with your monthly repayments or you get into financial difficulties, we would work with you to sort something out, but as a last resort, we can sell your home to recover the money we lent you.

Please remember, house prices can go down as well as up. If you owe more than the current value of your home, you will be in negative equity. If you need to move home and sell your property, and if its value has dropped below what you paid for it, there may be a shortfall between the amount you owe on your mortgage and the amount you get for the sale which you will need to repay.

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What else should I consider?

A good interest rate is important but flexibility can make a big difference to managing your mortgage. For example, will your deal let you pay off your mortgage more quickly or take payment holidays? At Halifax, these features come as standard (conditions apply) – whatever mortgage you choose.

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