How To Get The Best Mortgage
When my partner and I decided to buy a house, there were so many questions that we had about the process, and how to fund it all. There were things that we had not even considered and as we were first time buyers, and we tried to consult google for some answers.
The results were disappointing, and most of the pages were trying to sell you mortgage products rather than just guide you through and help you choose a product. There didn't seem to be much in the unbiased opinion of which is the best mortgage and how to apply for a mortgage other than: consult your bank.
I don't like to dive in without doing research, and I'm sure there are others out there who are the same. This hub will talk you through the best way of finding a mortgage to suit your needs, and also how to increase your chances of being approved first time.
How to Quickly Declutter Your Finances
- Close 0 balance accounts.
- Close any inactive accounts.
- Pay off trivial balances in full.
- Reduce debt as much as possible.
- Consolidate, if possible.
- Prioritise - high interest first
Check & Tidy Your Finances
This is something that should be done as soon as possible. In order to be realistic about your mortgage options, you must try to firstly determine your lend-ability to mortgage providers.
Having this insight gives you a head start, as you can begin working to improve your credit score as soon as it is known to you.
Simple steps such as tidying financial outgoings, and merging unused accounts can have a great impact and increase the chance that your mortgage application is accepted, first time. It is also worth maintaining a good credit profile as once you have your home, you may wish to go for other fixed rate mortgages in future and a well maintained score will help with this.
You should also make a start on saving your deposit, which will be required to secure your mortgage. Most deposit funds are required to be 10% of the total borrowed sum, with some companies offering 5% deposit options. The more deposit you have, the better a rate you can get on your borrowed sum. If you decide to use less than you have saved, you then have a nice pot to use for decorating and repairs.
Do Your Research
If you are not already comfortable with it, you should research what to expect during the house- buying process. This will help you better understand where the mortgage dealings crop up- unexpectedly sooner than you may think!
You should begin to look over lots of various bank, credit union and building society websites to see what type of mortgage products are realistically available.
Even though a type of mortgage is advertised, it isn't necessarily likely that you will qualify for it, or that it will suit your needs.
Also look into right to buy schemes and 5% deposit schemes that are backed by the government, and check eligibility for those. Keep in mind any requirements for the property when home hunting in order to remain eligible for the particular schemes- for example, it may have to be a new build or newer type of property. It will likely have to be your first home.
I won't try to come off as a financial adviser or a banker, because I have only ever had experience of a fixed rate mortgage with a 5% deposit. I never used any government schemes or anything like that, so it is best to investigate on your own. Try checking websites such as moneysupermarket or moneyadviceservice for more information- this is their speciality.
How well have you researched?
Calculate Your Budget
This is extremely important that it is done correctly. You should remember to budget for every aspect of your spending, from gym memberships, mobile phone bills and general household bills to nights out and socialising. It is important to be realistic when you budget, or you risk overspending and being tempted into further debt.
You should also budget for a little saving as you will come across unexpected bills and repairs as a homeowner, and having a little pot will come in handy.
Meet With A Mortgage Adviser
The best way to find out about the best deals, best companies and best rates is to speak to an independent mortgage adviser. They can run a check for you, much in the same way a price comparison website will, and they may also be privvy to certain discounts as they are in the trade.
You can discuss your lifestyle and financial obligations with the mortgage adviser and they can make a recommendation for the best type of mortgage to suit your needs.
Speak To Chosen Provider
When you have chosen the best provider, it is best to meet with one of their own mortgage providers before making any offer on a property. This is so that you can go over the likelihood of being accepted. If you have prepared well in advance by tidying your finances then this should be fairly simple, and just confirmation that your mortgage product is available.
You will then get a mortgage promise which is a document which states how much you are able to apply for, and indicates that you are likely to be accepted for the mortgage, providing certain terms are completed at the time of application- ie subject to a deposit or clearing a certain debt. It is not a guarantee that you will get the mortgage approved, as there may be circumstances that crop up which mean a mortgage cannot be paid.
Documents Required for a Mortgage Application
- Marriage Certificate, if applicable.
- Bank statements
- Credit card statements.
- Store card statements.
- Loan balance letters.
- Student loan balance letters.
- Evidence of savings
- Evidence of investments.
Apply For Mortgage
Once your have found your perfect property, and had your offer accepted, you should now apply for your mortgage. This is the more serious mortgage meeting, and can take a few hours. This is where the provider looks over your surveys and other documentation, so try to keep it as quick as possible by having all of the necessary documentation in order before the meeting.
Remember, you can choose any provider to have the mortgage meeting with, not just the one where you got a promise, however it can be a bit easier to carry forward an application than begin a whole new one.
If you have prepared and researched thoroughly, you will be approved for your mortgage within an hour or two. It is quite a long meeting, understandably, as the provider is releasing a lot of money.
Once you have the funds in place you can continue with your home buying journey! Good luck!
© 2015 Lynsey Harte