Posted: 18 August 2014 by Higgins Homes
When it comes to obtaining a mortgage, particularly if you haven't gone through the process before, it can be intimidating and confusing. There are so many different mortgages to consider, as well as numerous variables from your deposit amount to your credit score that it's hard to get a clear idea of what steps to take next. With that in mind, below are some good, solid tips on getting a mortgage and making sure that it's the right one for you.
1. Don't just jump straight in with an application. There are a number of different elements to consider before you begin the process of applying for a mortgage. The first is your credit score this is what lenders will look at to make a judgment as to whether or not you're credit worthy. Begin by obtaining a copy of your credit report from an organisation like Equifax or Experian this will allow you to see if there's anything that needs correcting and give you a good idea of whether you're a good candidate for a mortgage.
2. Do you have a deposit? Most lenders now require at least a 25% deposit if you want to get a good rate on your mortgage loan (borrowing any more than this usually results in 'higher lending charges'). Look at schemes like Help to Buy through which you can buy with just a 5% deposit and either a mortgage guarantee or equity loan supported by the government if you're determined to buy but don't quite have enough deposit.
3. Remember that there are additional costs associated with buying a property, not just the mortgage. For example, stamp duty is 1% of the purchase price up to £250,000, 3% up to £500,000 and 4% above that. You will also need to consider the physical costs of moving (removals van etc), as well as the lawyers fees and the extra expense involved in actually owning, for example buildings insurance.
4. How much can you afford to pay? Mortgage eligibility is now based on affordability so you must make sure that you really will be able to make the repayments as well as keeping up with all your other regular expenses. It's key that you don't take on a bigger mortgage than you can afford.
5. What type of mortgage is right for you? Look out for the lowest possible interest rate this usually comes with a bigger deposit and do plenty of research before committing to anything. Consumer websites like Which? offer some fantastic insight into the different mortgage types, such as Tracker, Discount or Fixed Rate, and you can also speak to a mortgage broker find one that is regulated by the Financial Conduct Authority and not restricted to products offered by a limited number of lenders.