How does a mortgage work in Guernsey?

We’ve been supporting customers with their financial needs for over 160 years, so we understand what’s important when it comes to buying a home.

If you’re a first-time buyer or an existing home owner looking to purchase or remortgage a property in Guernsey, keep reading to find out what to expect when making such a big financial commitment.

What is a mortgage?

A standard mortgage is a large loan secured against the value of your property until it’s paid off. These loans will typically run for a period of 25 years and during this time, you’ll be expected to pay back the amount you’ve borrowed, plus interest by making regular monthly payments.

A mortgage can be taken out with a bank or building society, and there are a range of different products available on the market to choose from, depending on your circumstances. For example, Retirement Mortgages or Retirement Interest Only Mortgages could be suitable if you’re looking to borrow in later life, while Expat Mortgages are for those who live or work abroad, looking to buy a property in the UK.

Mortgage products will usually offer a fixed or variable rate of interest. A fixed rate mortgage means your monthly repayments remain the same until the fixed period ends, giving you the security of regular monthly payments, while a discount rate mortgage may offer lower rates of interest, but your monthly repayments could change at any time because the interest rates could fall or rise.

There are also different methods of paying back a mortgage; a repayment mortgage means you’ll pay back both the loan and interest over the mortgage term, while an interest-only mortgage means you’ll only pay back the interest on your monthly instalments, but you’ll need to have a plan in place to repay the mortgage in full when the term ends.

Before you apply for a mortgage

It’s important to work out how much you can borrow before you apply for a mortgage, so that you know how much you’ll need to save for your deposit, and what kind of property you’ll be able to buy.

The Loan to Value (LTV) is a percentage of the property price, and this figure could vary depending on your lender, the type of mortgage product you choose, and your financial circumstances. The LTV is important because you’ll be expected to pay the difference up front before taking ownership of your new home.

Once you’ve embarked on your mortgage journey, there’ll be affordability checks to complete, a property valuation that needs to take place, and other various steps along the way. This may feel daunting, but your mortgage adviser will be able to guide you through the process.

How can we help?

We understand that big decisions aren’t to be taken lightly, which is why we’ve partnered with SPF Private Clients, the largest and longest running mortgage broker in Guernsey.

If you’ve found a property you’d like to buy, and you’re looking to start your mortgage journey, SPF’s team of experienced advisers are on hand to provide expert mortgage advice and a tailored service, so they can guide you through the entire process. With access to our full range of products, SPF can recommend a Marsden mortgage to suit your needs.

If you’d like to get in touch with SPF, please visit our ‘Contact SPF’ page. Or, if you’d like to view our range of mortgage products, please visit our ‘Mortgages’ page.