Buying a home and choosing a mortgage is one of the biggest decisions you’ll make. It’s important that you choose wisely and don’t make any decisions that you’ll regret. If you’re buying your first home, remortgaging or moving house, what should you be looking for?
Before You Apply
If you’re looking to remortgage then have an idea of how much your house is currently worth and the loan-to-value percentage. If you have a good loan-to-value then you’ll be offered a better rate. Before you apply for a new mortgage you should save the largest deposit you can. The best rates are reserved for those with good deposits, so it’ll save you money in the long run.
Before you approach a lender make sure you check your credit file for any problems before they carry out a search. If there are any discrepancies you’ll still have time to sort them out or speak to an IVA expert before they cause any problems.
Once you’re ready to apply for a mortgage have a good look around and see what’s on offer. You should research all the major lenders and use comparison sites to see how much you can borrow and at what rates. This way you’ll be more aware of the different products that are available and be able to choose the best deal for your circumstances.
Finding The Best Deal
Many buyers shy away from fixed rates, as the monthly payments are generally higher then with tracker products. The base rate has been low for a considerable amount of time, but that’s no guarantee that it will remain so. If you want to ensure that your payments stay the same, then you should opt for a fixed rate. If you are considering a tracker mortgage, make sure that you could afford the extra if rates were to increase.
When You Apply
When you’ve chosen your preferred lender don’t be tempted to go with what they say. If you’re remortgaging or moving house, you may be offered the option to extend the term of your loan by starting the 25 year period again. This may seem tempting as you’ll save on your monthly payments. However, you need to consider how much extra you’ll be paying by increasing the length of the loan.
Similarly, if you’re switching to a better rate you may have lower repayments. If possible you should continue to pay the same amount as before, as you’ll pay less overall and repay the loan sooner. You should check with your lender if this is possible, but many mortgage deals allow you to overpay a certain percentage.
Many applicants forget to take into account the fees that lenders levy on mortgage products. Usually the cheaper the deal, the more the fees will be and you should consider how much these will cost in interest over the period of the loan.
We may still be in the middle of an economic downturn, but there are good mortgage deals out there. However, you need to shop around, have a decent deposit and a good loan-to-value percentage. When you’re researching deals, don’t be tempted by the headline rates. Make sure you delve into the hidden costs and charges and know exactly what you’ll be paying.
