A mortgage is a loan from a bank or a building society that is secured against your home. This means if you default on the repayments of the loan, your property could potentially be repossessed by the mortgage lender.

As a benchmark, you will be able to borrow around 3.5 times a single salary or 2.75 times joint salaries. However, mortgage lenders are increasingly employing affordablity models, whereby your financial commitments are deducted from your net monthly income and the remaining balance must be sufficient to secure the level of mortgage for which you are applying. Most people agree that with mounting consumer debt, this is a much more responsible approach to lending.

Your monthly mortgage repayment will typically be calculated over a 25-year timeframe. However this does not necessarily mean that this will be the term of the loan. These days, as mortgages become more flexible, you can choose to pay extra each month which means you will arrive at the end of the loan sooner. And if you have trouble paying, you can also extend the loan to more than 25 years.

To get a mortgage, you will also need a typical minimum deposit of five per cent of the property value at the time, although 10 per cent is increasingly becoming the norm.

The interest rate payable on a mortgage will vary according to the lender, the particular deal and the size of the loan in relation to the value of the property – or the Loan to Value (LTV). However, the rate will be set roughly in accordance with the Bank of England base rate which is reviewed and may change around the beginning of each month. LIBOR (London Inter-Bank Offered Rate) which is the rate at which banks lend to each other, is also crucial to the final mortgage rate you will be offered.

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