Know
your onions
Getting a mortgage can be a tricky affair and for first time buyers
daunting to say the least. It’s important to select the right lender and get
the best possible rate so you don’t pay a higher rate than necessary.
So for some buyers waiting and saving a bigger deposit can in the long
run save thousands of pounds on their annual mortgage.
Getting to know how a mortgage works, the process involved and what
lenders need from you. This can help you to secure a better interest rate and increases
the chances of getting accepted for a decent sized loan. The big problem with banks today is that they
continually change their lending criteria leaving you chasing your tail.
What
you need in your shopping basket
To get a mortgage you will need a:
- clear credit history;
- solid deposit; and
- suitable home.
Support of parents for many can be the difference needed to get a
mortgage.
Big
is better
The size of your deposit will determine what your monthly mortgage
payment is and the interest rate that you pay.
In the main all lenders use a loan to value banding system meaning you
pay considerably more if you only have a small deposit.
A further 5% on top of what you have saved if you can because will give you
big saving when trying to secure a mortgage. For example if you have a 10%
deposit, you may for example get a rate of 5.75%. With another 5% deposit this
could drop to say 4.29%. The point being that the extra deposit will make a
difference to the mortgage rate you can secure.
Be
Prepared
Before any mortgage offer is forthcoming any lender will need to know
what your monthly outgoings are and how much you have left at the end of the
month. Lenders will take into account
any existing borrowing you have and this will include credit card and store cards.
Because of past history with interest only mortgages if you are trying
to secure this type of mortgage you will be faced with needing a possible 25%
deposit. Some lenders will require you to earn a minimum of £30,000 to
qualify.
This is because while interest only mortgages offer a more affordable
way to get on the property ladder and the monthly payments are considerable
less because you only pay the interest on the money you borrow. The onus however
is on you to ensure that at the end of your mortgage term you have all the
capital you borrowed to repay back to your lender.
Red
hot chilli pepper tips to help you get a mortgage.
- Make sure you are on the
electoral roll.
- Don’t miss any monthly
loan payments including credit cards as this can count against you.
- Try and reduce any personal
debt this means you can borrow more.
- Don’t apply for more
credit while your mortgage application is going through.
- Check and know your own
credit rating.
- Have available your
payslips and P60’s.
- And as with anything financial, do your homework, know what lenders want from you.
And don’t forget throughout this journey David
Jordan Estate Agents will be with you every step of the way offering
their years of expertise to guide you along the way.
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