Mortgage Guide for Families: How to Make Smart Home-Buying Decisions

Buying a home is one of the biggest financial steps you’ll ever take. It’s exciting — but it can also feel confusing. At That’s Family Finance, we’re here to make it simple. This guide breaks down everything you need to know about mortgages, from the basics to protecting your family’s future.

What Is a Mortgage?

A mortgage is a loan you use to buy a property. You borrow money from a lender and repay it monthly — with interest — over a set period, usually between 25 and 35 years. The property itself acts as security for the loan. The goal: Find a mortgage that’s affordable, flexible, and suits your long-term plans.

Types of Mortgages Explained

There are several kinds of mortgages available. The main ones include:

• Repayment Mortgage — You pay off both the loan and the interest each month. When the term ends, your home is fully yours.

• Interest-Only Mortgage — You only pay interest each month and repay the original loan at the end.

• Fixed-Rate Mortgage — Your interest rate stays the same for a set term, giving predictable monthly payments.

• Variable or Tracker Rate Mortgage — Your interest rate moves up or down with the Bank of England’s base rate.

How Much Can You Borrow?

Lenders base your loan amount on your income, outgoings, and credit history. As a general rule, most lenders offer around 4 to 4.5 times your annual income, though this can vary — some may lend up to 5.5 times in specific cases.

Deposits and Loan-to-Value (LTV)

Your deposit is the upfront amount you pay towards your new home, typically 5%–25% of the purchase price. The rest is borrowed as your mortgage. Loan-to-Value (LTV) measures how much you’re borrowing compared to the property’s value. A lower LTV means you borrow less — which usually gets you better rates.

Example: For a £300,000 home, a £30,000 deposit means a £270,000 mortgage — that’s 90% LTV.

Don’t Forget These Extra Costs

When budgeting, remember to include these additional expenses:
• Solicitor or conveyancer fees
• Valuation and survey costs
• Stamp Duty (if applicable)
• Moving costs
• Broker or adviser fees

The Mortgage Application Process (Step-by-Step)

Here’s how a typical mortgage journey looks:
1. Speak to a broker or adviser — they’ll assess your finances and recommend suitable lenders.
2. Get a Decision in Principle (DIP) — a lender’s initial indication of how much you can borrow.
3. Make an offer on a property.
4. Legal work and valuation — your solicitor and lender handle paperwork and checks.
5. Completion — funds are released and the property is officially yours!

Protecting Your Home and Family

A mortgage is a long-term commitment — but life can change overnight. That’s why it’s essential to have financial protection in place.

Recommended cover includes:
• Life Insurance — Pays off your mortgage if you pass away.
• Critical Illness Cover — Provides a lump sum if you’re diagnosed with a serious illness.
• Income Protection — Replaces your income if you can’t work due to illness or injury.

Remortgaging and Reviews

When your fixed-rate deal ends, you’ll usually move onto your lender’s Standard Variable Rate (SVR) — often much higher. To avoid overpaying, review your mortgage regularly and remortgage when better deals become available.

Common Mortgage Mistakes to Avoid

• Overstretching your budget
• Skipping protection cover
• Ignoring your credit score before applying
• Forgetting to review your mortgage when your deal ends.

Final Thoughts: Protect. Plan. Prosper.

Owning a home isn’t just about bricks and mortar — it’s about building security and a legacy for your family. With the right advice, smart planning, and protection, you can achieve your homeownership dreams with confidence.