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 choosing the right mortgage.
The festive season is a great time to be in the property market. Buyers suddenly appear on the scene, and lenders and developers offer attractive deals.
You can still host your housewarming celebration on a lucky day. But, make sure to avoid common mistakes when taking out a loan for your home.
5 Mistakes to Avoid for Mortgage Loan
A major decision in life is to buy a house. Do we plan well enough when taking out a loan for a home? Is the home loan program the best?
Because it is a costly and long-term commitment, you need to plan and analyze before applying for a home loan.
You could lose your financial health if you don’t research enough. It would be best if you were careful when applying for a loan on your home.
Because it is a costly and long-term commitment, you need to plan and analyze before applying for a home loan.
You could lose your financial health if you don’t research enough. It would be best if you were careful when applying for a loan on your home.
#1. The Overall Cost of Comparison
When 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. Many factors are involved making it even more difficult for us to make a choice.
Selecting one is difficult because every mortgage provider offers a different deal. Such one may include product fees, application fees and redemption fees, while 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 the initial interest rate.
#2. Pass the Affordability Test
Lenders don’t just consider your monthly income to conclude whether you should be granted the mortgage or not.
They also must 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 a mortgage.
Along with the mortgage application, also provide a household budget which contains details of your expenditure and monthly income. You can take the help of professionals at Altrua Financial.
This shows that you are proactively managing your finances. Also, it would be best if you are looking to clear any debts you may have, such as credit card bills, student loans etc.
#3. Credit Score
Before making a mortgage application, you should identify any results that you may not be expecting but could affect your credit score. Becoming aware of them later during the application process may not be useful.
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 that you can easily amend.
#4. 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.’
Lenders that provide special mortgages such as these will consider your professional status and may offer you a preferential rate for a higher-value loan.
Different lenders may have different criteria, but usually, the factors considered include professional qualifications, age or affiliation with an appropriate governing body.
#5. 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 involved in the process, it consumes a lot of your time and making mistakes can prove quite costly.
It would be best if you got in touch with an experienced financial consultant who understands 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 possible to find the best one. 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 a Will costs and ensure that you have all the important documents in place.
