Residential Mortgage

Explore the complete guide to residential mortgages today and get expert help if you need it! Contact us to learn more about how we can support you.

When it comes to buying a home, securing a residential mortgage can be an overwhelming process. With so many different types of mortgages available, it can be challenging to know which option is right for you.

This guide covers everything you need to know about residential mortgage types, interest rates, processes, and more. So, whether you’re a first-time homebuyer or an experienced investor, this guide can help you navigate the residential mortgage process.

Together, we’ll explore the ins and outs of this type of mortgages so you can make an informed decision as you move forward with your purchase. Let’s get started!

What is a Residential Mortgage?

A residential mortgage is a loan to buy a property to live in. The mortgage loan is secured on the property. If you cannot make payments, your lender can take ownership of the property and sell it to recover losses.

It is typical to determine residential mortgages based on the property’s value, creditworthiness, and income. Rates for this mortgage can be fixed or variable; it’s your choice. If you choose a fixed rate, your monthly payments will stay the same throughout the fixed term. A variable rate means the interest rate may change, so your monthly payments can go up or down.

Residential mortgages are paid back in monthly instalments over 5-40 years. Most people take a ‘capital and interest’ mortgage, sometimes called a ‘repayment mortgage’. This means the monthly payment consists of the interest cost and an element to repay the debt so that the mortgage is fully repaid at the end of the term.

For higher earners or those with a larger deposit, it is possible to take an interest-only mortgage which would mean lower monthly payments. You, instead, would have to have the means to repay the whole debt at the end of the mortgage term, and the lender would need to agree that your repayment strategy was credible.

What is Second Residential Mortgage?

A second residential mortgage is a loan taken out in addition to an existing residential mortgage. These loans are secured on the same property as the first residential mortgage. A second mortgage may be used after your initial purchase for things such as home improvements, helping a family member, debt consolidation, or other needs.

A second residential mortgage is from a different lender than the first mortgage and is usually referred to as a second charge. This is because the first lender has the ‘first charge’ claim against the property if anything were to go wrong.

Due to added risk of being second in line, if things go wrong, second-charge mortgages may come with higher interest rates and fees than the first residential mortgage.

Sometimes the existing first charge lender can consider additional borrowing, and this is called a further advance.

Whether you are buying your first home, moving, want to raise further capital or want to get a better mortgage rate, a Synergy Financial adviser can help. Be sure to speak with our mortgage advisors for more specific information. They can help you understand your options and find the right residential mortgage for your needs.

The Benefits of Residential Mortgages

There are many advantages to taking out residential mortgages. A residential mortgage helps you to purchase your home without the need to pay a large sum of money upfront and if property prices increase, you could build up equity in the property over time. Here are some of the top benefits of this mortgages:

Low-interest rates:

It typically comes with lower interest rates than other types of loans, such as credit cards or commercial loans, making them more affordable.

Flexible repayment terms:

Residential mortgage lenders are often willing to provide flexible repayment terms, such as overpayments or fixed or variable rate options.

Builds Equity:

If you take this mortgage on a repayment basis, meaning your monthly payments consist of capital and interest, some of your payments count toward reducing the principal balance of the loan.


It can provide financial stability if you opt for a fixed interest rate, as your interest and, therefore, monthly payments will remain the same for that fixed rate period.

If you’re considering taking out this mortgage, our mortgage advisors are here to help. Contact us today to learn more about residential mortgages and how they can benefit you. We look forward to hearing from you!

How Does a Residential Mortgage Work?

Residential mortgages are loans taken out to purchase property such as a house, flats, bungalow, or other residential property specifically for you to live in. Banks and lenders offer residential mortgages by providing a lump sum loan to cover the purchase cost in exchange for regular payments, typically ranging from 5-40 years. The longer you take a mortgage for, the lower your monthly payments will be, however, you will then pay more interest in the longer term. This types of mortgages are secured loans, meaning they use the property purchased as collateral to protect the lender.

In addition to the loan amount, borrowers typically need to provide a down payment to secure their loan. This down payment, called a deposit, can be as little as 5% of the total purchase price, and lenders require this to reduce risk. When applying for a residential mortgage, the lender will assess your credit history and income level to determine whether you can meet their repayment requirements.

How Does Interest on Residential Mortgage Work?

Interest is the percentage of a loan paid over time to the lender in exchange for borrowing money. Residential mortgages require borrowers to pay interest on their loans and are charged according to an Annual Percentage Rate (APR). The APR considers the total cost of a loan, including interest rates and any additional fees or charges.

Interest rates on this mortgages are set by lenders and can vary depending on the borrower’s credit score, loan amount, repayment term length, and other factors. Generally, the higher the risk to the lender, the higher the interest rate they will require. Whilst the best rates are reserved for clients who represent the lowest risk, it is still possible to obtain a competitive mortgage rate even if you had some credit issues such as late payments on other credit or County Court Judgements (CCJs).

Residential mortgages usually have a variable or fixed interest rate, with variable rates changing according to market conditions.
Interest payments are typically collected monthly and are spread out over the repayment term of the loan. Interest is calculated based on the outstanding loan balance and factored into your monthly payment.

Mortgage Advice..

Thinking of getting a mortgage? Our experienced team of skilled mortgage advisers are here to offer the essential guidance you require. Relying on our comprehensive understanding of the mortgage market, we’ll ensure you secure the perfect mortgage to suit your specific situation. 

Residential and Commercial Mortgage

Residential mortgages are for purchasing a home, flats, or other residential property that you plan to live in. It typically needs to be repaid by the time you retire, as the affordability of It is based on your working income. However, some specialist residential mortgages allow you to have a mortgage in retirement. Residential mortgage lenders require borrowers to make a down payment, called a deposit, to reduce risk. The deposit can be as low as 5%, but if you have a bigger deposit you can secure a lower interest rate.

On the other hand, commercial mortgages are used to purchase business or commercial properties such as office buildings, warehouses, and retail stores. Commercial mortgages tend to have shorter repayment terms (5-20 years) and higher interest rates than residential mortgages. Commercial mortgage lenders also typically require borrowers to have a bigger deposit and make a larger down payment than residential mortgage lenders to reduce risk (25% – 40%). Additionally, commercial mortgages may have higher fees and other costs associated with the loan. Both residential and commercial mortgages usually offer variable or fixed interest rates to choose from.

Buy to Let vs Residential Mortgages

The following are some differences between buy to let vs residential mortgages

Buy to Let

Residential Mortgage Rates

Residential mortgage rate options vary based on credit score, loan amount, and which lender you choose.

When picking a lender, you will also usually be offered a choice of rate types. There are two main types, fixed rates and variable rates.

Fixed rates mean your monthly payments will not change for the term of the mortgage, regardless of what is happening to interest rates in the market. Lenders offer various fixed rate terms, so for example, if the fixed rate term were five years, you would be able to plan and know exactly what your payments would be for the full 5-year fixed rate term.

Variable rates mean your monthly payments could increase or decrease dependent on interest rates in the market. Variable rates can also be called discount rates or tracked rates. Discount rates are where the lender offers you a discount against their standard variable rate. Tracker rates usually track the rate set by the Bank of England.

A variable rate may offer a lower monthly payment initially, but you need to be prepared for the possibility of a rate rise, which will increase your monthly payments.

Whatever interest rate type you select, you need to ensure the monthly payments are affordable now and in the future as far as you can predict. Our mortgage advisers can assist you with assessing this.

Residential Mortgage Calculator

Our residential mortgage Calculator can help you quickly estimate monthly payments and the total cost of your loan.

 You can also see how different interest rates, loan amounts, and repayment terms will affect the overall cost of your mortgage.

With our calculator, you can easily compare options and get a comprehensive picture of what you’ll be paying for your residential mortgage. Try it today and see how much you can save!

If you need guidance on the type of rate you qualify for, our advisers will be pleased to assist. 

Residential Mortgage Advisers or Mortgage Brokers

You may have heard of the term mortgage adviser and mortgage broker and wonder what the difference is. The term mortgage adviser tends to be used for qualified, experienced advisers offering advice on residential and buy-to-let mortgages. The term mortgage broker tends to be used by advisers operating in specialist markets such as commercial.

Whether your mortgage specialist is called an adviser or a broker, they all offer guidance on understanding your needs and finding the correct lending solution for you.

Our residential mortgage advisers at Synergy Financial are knowledgeable and experienced in helping consumers find the ideal residential mortgage loans available. We have access to over 170 lenders, ensuring you get the most suitable rate and terms for your loan. In addition, our mortgage specialists are here to guide you through the entire process when obtaining a residential mortgage loan, so you can be sure you are getting the right deal possible. Contact us today to get started!


To be eligible for a residential mortgage, applicants must meet specific criteria, including:

  • Aged 18 or over
  • And purchasing a property in England, Wales, or Scotland.
  • Applicants must also have an income sufficient to cover the monthly mortgage payments and other living expenses.

It is possible to arrange a residential mortgage even where you have complex requirements. For example, we can assist customers that have had credit blips, been turned down by high street lenders, have only been self-employed for a year, are employees working on contracts and more. 

If you would like to find out if you qualify for a mortgage, contact us today to find out more.

Change a Residential Mortgage to a Buy to Let Mortgage

If you have an existing residential mortgage but would like to move out of the property and convert the mortgage from a residential mortgage to a buy-to-let mortgage, then our team can help.

If you have sufficient equity, we may also be able to help you to capital raise some money that you could use as a deposit for your new residential mortgage. 

Many portfolio buy-to-let investors start their property investment journey this way. A specific type of buy-to-let mortgage called a ‘Consumer buy-to-let’ mortgage would be used. You can find out more about mortgages for property investment on the buy-to-let pages of this website. 

If you would like some advice, our Synergy Financial advisers will consider your current financial situation and provide tailored advice on your ideal options. Our mortgage advisors are knowledgeable about all types of mortgages, and we can help you switch from a residential mortgage to a buy-to-let mortgage if this is the best solution for you.

Final Thought

A residential mortgage transaction involves making important decisions that should be taken seriously. Shopping around for a reasonable rate and applicable terms and conditions that meet your needs is essential. Residential mortgage brokers can provide invaluable assistance when finding the right loan. In addition, ensure you use a residential mortgage calculator to get an overall picture of your monthly payments and total costs. You can make your ownership dreams come true with the right residential mortgage.

FAQs: Residential Mortgage

Most frequent questions and answers about residential mortgage

An interest-only residential mortgage is a type of mortgage where the borrower pays only the interest on the loan each month instead of repaying part of the capital. This option allows more flexibility when it comes to affordability and monthly payments but is usually only offered to applicants with high incomes and deposits..

Consent to Let is an arrangement where the lender agrees for a certain period to allow a mortgagor to rent their mortgage property until they can switch to a residential BTL mortgage. This option allows the borrower time and flexibility when looking for alternative solutions to housing needs. It is important to seek consent, or you will breach the lender’s rules. You can also speak with an adviser about remortgaging the residential mortgage to a buy-to-let mortgage,

It is not possible to change your buy-to-let mortgage to a residential mortgage without a full affordability and underwriting assessment from the lender. This is because when a buy-to-let mortgage is arranged, the affordability assessment is based on you receiving rental income, not making the payments yourself.  If you move into a property that you have a buy-to-let mortgage on, you will be in breach of the lenders conditions. A breach of this nature can have a serious effect on your ability to get future mortgages.  A good mortgage adviser can help you make the changes you need the right way.

Yes, it is possible to have two residential mortgages simultaneously. You may have your main residence, for example, plus a home you use during the working week or as a holiday home.  However, you must demonstrate to the lenders that you can afford both mortgages. It is important to consider your financial capabilities and the terms and conditions of each residential mortgage before deciding to take a second home.

Yes, it is possible to have both buy to let and residential mortgage simultaneously. However, it is important to assess your financial situation before taking on any additional debt.

Having a buy to let mortgage may affect your chances of getting a residential mortgage, as lenders will consider the additional debt when assessing your financial situation – they will take into account any rental income you receive if you have tax returns to evidence this. It is best to discuss this with an independent financial adviser or your lender before making any decisions.

It is not allowed to rent out a property with a residential mortgage without the lender’s permission, as it is considered mortgage fraud. If discovered, the lender may demand repayment or repossession of the property.

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