Mortgages made clear

Whether you’re a first-time buyer, moving home or staying put and remortgaging, this site can help you choose a suitable mortgage. You’ll find everything you need to know: how mortgages work, how you can work out what you can afford, and where you can go to compare mortgages. Our jargon buster will help make mortgages clearer for you.
If you’d like more detailed information, look at our mortgage pack Choosing a mortgage – taking the right steps. You can download or order it online at Publications.

What is a mortgage?

A mortgage is like any other kind of loan – you borrow money, and you pay it back with interest over a period of time. But it has one key difference: it’s secured against your home. So if for any reason you can’t repay it, the bank or building society can sell your home to recover their money.

Buy-to-let mortgages

A buy-to-let mortgage is a loan you take out to buy a property which you intend to rent to tenants. Although we regulate the way most mortgages are sold, we don’t regulate the mortgage sale if one or both of the following apply:

  • The mortgage is a second charge on your home – this means you already have a loan secured against your home.
  • Less than 40% of the property on which the loan is secured will be used as a home by the borrower or a member of the borrower’s immediate family – for example, if you’re renting out the property.

Therefore, in most cases buy-to-let mortgages are not regulated by the FSA, which may mean you have less protection if things go wrong. Buying a property to let is a long term investment which you hope will generate an income from rents and a capital gain when you sell the property. There is no guarantee that you’ll make a profit on your investment.For information on ‘buy-to-let’ see the Council of Mortgage Lenders’ (CML) leaflet ‘Buying to let’ on their website at Related links.

*Cited From the UK FSA