Kelsey’s guide to mortgages and home loans, for beginners

NOT TRYING TO SELL YOU ANYTHING, JUST FREE INFORMATION THAT YOU MAY FIND HELPFUL

Interest Rates

First it is important to understand the concept of interest rates.
Essentially, interest rates are how banks and building societies make their money through lending money to you to buy your own house. Over and above the amount of money which they lend you, and obviously expect you to repay, they charge you ‘interest’ on the loan – which is an agreed percentage of the loan, on top, which you pay back alongside the loan repayments.

Apart from the initial interest rate or percentage that you agree with a lender when you first take out a mortgage, the other factor that can affect that interest rate is the national or global interest rate – that is the rate at which the bank must borrow money from other banks or central banks – where possible they will try and pass on rises in that rate [and to a lesser extent reductions] to you the customer.