Getting a mortgage can be one of the biggest financial decisions you will ever make in your life. Here is a guide where we give you some top tips to help prepare you for a mortgage and the best way you can take a step further to a mortgage offer.
However, there are some risks that can prevent you from being approved of a mortgage offer. This can be due criminal records, No credit score or poor credit score or not enough deposit.
Step 1: Deposit
As part of buying a home with a mortgage you will need a deposit. If you haven’t saved already, start saving! (check out our blog on tips on saving here….. ) Analyse your spending habits. Set yourself a saving goal, work out how much you could save and what type of property you could afford. The bigger the deposit the cheaper the mortgage rate will be.
Mortgage deals come with a maximum loan-to-value therefore this should not be over 80%.
Mortgage deals can be anything up to 95% loan to value, dependent on your earnings and what you are purchasing.
Step 2: Check credit score
The first thing lenders usually look at is your credit score, this is to analyse how well you have dealt with money in the past. You can check your credit score on websites TransUnion, Experian & Equifax for free. There are ways you can also improve your credit score.
Step 3: Work out how much you can afford.
Work out all your outgoings, use a mortgage calculator to calculate what you can afford based on your deposit and income. Lenders will always take this into consideration when they decide to loan to you.
Lenders will usually lend four and a half times the total annual income you receive. However, some lenders have different rules where they lend. You always want to make the sensible decision and borrow the amount you know you can re pay monthly.
Step 4: Get your mortgage in principle.
A mortgage in principle can really help in the process of buying or looking to buy a house. This isn’t a full mortgage offer however it is an indication of how much the lender is willing to lend.
This will also help the process of when going to view properties as most homeowners & estate agents will want to see proof of funds before viewing a property.
Step 5: Find the right mortgage term.
Establish and understand the different types of mortgage types. This refers to the number of years you could have to pay back the loan. You will also need to consider extra fees like valuation and agreement fees.
Here are some of the different terms.
Above needs consistent casing, some lower and some higher
Step 6: Get in touch with an independent mortgage advisor.
You can apply for a mortgage without a mortgage advisor, direct with your bank, however sometimes using an independent mortgage advisor can be more helpful getting a successful mortgage application. As they can reach out to extensive amounts of banks and attempt to get the best offer possible for you. They would still approach the bank you bank with also; it is likely they will have far more products to offer than your bank.