Mortgages

A mortgage is a long-term loan that a borrower obtains from a bank, building society, independent mortgage broker, online lender or even the property seller.

The house and the land it sits on serve as collateral for the loan. The borrower signs documents giving the lender a lien against the property. If that borrower doesn't make payments as agreed, the lender can take the home through repossession.

Because mortgages are such large loans, consumers pay them off over long periods -- usually 15 to 30 years. Their monthly payments gradually whittle away the principal balance, slowly at first then rapidly toward the end of the loan.

The breakdown of each payment (the amount that goes toward principal, interest, etc.) changes over time because mortgages are based on a repayment formula called amortization. That's a fancy term meaning the lender spreads the interest you owe on the mortgage over hundreds of payments so that the overall loan is as affordable as possible.

Here's the good news: More people than ever can buy a home.

Now for the bad: It's going to take a lot of patience, restraint and some careful planning to get there. That loan officer sitting across the table won't look kindly on the new Lexus you bought or the stack of credit card bills on the kitchen counter. And if you've only managed to put away £1,000 in savings by then, it'll be time to forget about the £300,000 mansion.

To pull the purchase off, try heeding some of the guidelines below that our experts suggest. It may not always be fun, but doing so will help get you where you want to go.

Pay your bills and start saving
No. 1, pay your bills on time. There is no single element that can so dramatically impact the success of an application as your credit history, another thing, of course, is savings. You should have a good disciplined savings pattern. That's the kind of behavior that's going to make you a successful homeowner.

Everybody comes into the housing market with a different perspective and level of experience. The fact that online mortgage applications, new loan products and rising interest rates are competing for attention these days makes it all the more difficult to give foolproof advice, so we won't, you must make take professional advise.