Needless to say, the biggest purchase that we make in our lifetime is buying a home. Given the magnitude of the purchase, it becomes even more important to do the necessary homework when it comes to choosing the right mortgage.
Following are some tips that should help you to stay ahead of the game:
The Overall Cost of Comparison
When you are looking for the right mortgage deal for your house you should not fall for the trap that smart marketers lay down with their headline grabbing interest rates.
Comparing apples with oranges may be nonsensical but it is still easier than comparing apples with apples. There are many factors which are involved making it even more difficult for us to make a choice.
The reason why selecting one is difficult is because every mortgage provider offers a different deal such as one may include product fees, application fees and redemption fees whilst the others may not include these fees in their offer.
UK lenders must assist the consumers in making an informed decision and are therefore required by law to display an overall cost for comparison percentage which is also called Annual Percentage Rate of Charge (APRC) along with initial interest rate.
Pass the Affordability Test
Lenders don’t just take your monthly income into consideration to arrive at a conclusion whether you should be granted the mortgage or not. It is also their duty to understand the level of liability on your shoulders and whether you will be financially capable of keeping up with repayments after deducting your monthly expenses.
There are many things that you can do to build a stronger application for mortgage. Along with the mortgage application also provide a household budget which contains details of your expenditure and monthly income.
This shows that you are managing your personal finances in a proactive manner. Also you should look to clear any debts that you may have such as credit card bills, student loans etc.
Before you make a mortgage application you should identify any results that you may not be expecting but which could affect your credit score. Becoming aware of them later on during the application process may not be of much use.
Following are some reasons why your credit score may pose a concern
- You have lived in a flat or multi-occupancy accommodation and the person you shared the address with has a poor credit history.
- Official records still have you linked with a previous partner for credit.
- You have missed loan repayments or have always been late in repaying a loan.
It may be rare but your credit report may have inaccuracies which you can easily amend.
Take Advantage of Your Professional Status
If you are a qualified professional or a trainee such as a doctor, lawyer, dentist or teacher, there is a possibility that you could be eligible for a ‘professional mortgage’.
Your professional status will be taken into consideration by lenders that provide special mortgages such as these and may offer you a preferential rate for a higher value loan.
Different lenders may have different criteria but usually the factors which are taken into account include professional qualifications, age or affiliation with an appropriate governing body.
Don’t Overlook the Value of a Mortgage Broker
It is not an easy task to identify the right mortgage for your circumstances and submit a successful application. Even if you were to keep aside the various complexities that are involved in the process, it consumes a lot of your time and making mistakes can prove to be quite costly.
You should get in touch with an experienced financial consultant who has a fair understanding of how much you earn, sick pay entitlements, career progression, pension contributions and so on.
You should find out information about as many mortgage deals as you can in order to find the best mortgage deal. Your lender should be able to provide you with step-by-step guidance at each stage of the process.
Along with finding the right mortgage deal, you should also figure out how much does a Will cost and ensure that you have all the important documents in place.