Whether you’re thinking of how to mortgage for the first time or how much money do I need for a down payment on a house every step of the mortgage process is important. So how to mortgages.

Mortgages are loans that are taken out for a property. They can be used to purchase homes, buildings, land, or other items like cars and boats. Mortgages work by the borrower (mortgagor) borrowing money from the lender (mortgagee) who then owns an interest in the property until they are paid back. Often a legal contract is drawn up between the borrower and lender specifying how much money will be borrowed, the amount of interest payable and the repayment schedule which includes fixed monthly payments or an interest-only payment.

The value of the loan, interest and deposit will determine how much you can borrow. If you can afford to pay off your mortgage early then doing so will cut your overall interest costs and give you extra money to spend or put towards another investment. All mortgages come with fees and charges which include valuation fees, legal costs and mortgage arrangement fees. These are all necessary to cover the administrative costs of setting up your loan however they are often higher than the industry standard so it is worth shopping around for a better deal if possible. You can also reduce these types of expenses by drafting up your own legal contract and getting a friend to act as your mortgage broker.

You can also take out interest-only mortgages if your repayment strategy is to pay higher than the monthly or annual interest charges, though what happens when you retire and need income from an asset is generally up for debate.

Mortgages are often taken out on a secured basis which means that you borrow a set amount and that your lender can take possession of the property or other security if you fail to repay your loan. Unsecured loans do not require borrowers to secure their debt against an asset but they are often more expensive as a result.