If you are trying to get on the property ladder, the prospect of trying to secure a mortgage might seem daunting. After all, a mortgage is a big financial commitment and there are so many options when it comes to mortgages that choosing the right product is crucially important.
Here are some of the steps you should follow in order to secure yourself a mortgage suitable for your needs.
1. Find out your credit score
Your credit score provides a lot of information about how well you've handled your finances in the past and how reliable you are at paying back your debts. As such, it’s one of the first things a mortgage lender takes into consideration when deciding whether you're eligible for a mortgage or how much they should lend you.
If your credit score isn't as good as it could be, look to improve it as much as possible. To do this, try to catch up on all your debts, expand your credit file and pay down any revolving account debts.
2. Check out the types of mortgages available
When your credit score looks good, start looking at the types of mortgages available and what term they come with. Look at your own personal situation and try to find the mortgage that best suits your needs.
Fixed-rate mortgages guarantee you a set interest rate for a fixed period. Variable rate mortgages or flexible mortgages are mostly linked to the base rate, meaning they can alter over time.
The other thing you need to look at is the mortgage term. In other words, how long it will take you to pay back the loan? A longer mortgage term will normally mean lower payments spread over a longer period of time. However, mortgages with a long term may be hard to secure if you are an older first-time buyer, as lenders will question whether you will be able to pay it back during your working life.
3. Work out your personal finances
Be honest with yourself – how much can you comfortably afford to borrow? Remember, you will need to pay this sum back over a long period, so look at your current income and then tally up all your outgoings. What repayments would you be able to manage?
4. Speak to a mortgage broker
It is always best to seek help from a broker for a home loan. Although it is possible to apply directly to a mortgage lender, a broker can give you independent and professional advice and guide you to the best deals based on your circumstances. They look at a range of available mortgage options and help you with the whole application process.
5. Apply for a mortgage agreement in principle.
A mortgage agreement in principle isn't the same as a full mortgage but it can be very useful when you are trying to buy a home. The reason for this is that it can give you a good insight into how much you would get if you were to be granted a full mortgage. Also, you can use this paperwork when you apply for a full mortgage.
A mortgage in principle does not come with any commitment and does not affect your credit rating.
Once you have completed these steps, you are more likely than ever to be accepted for a mortgage. If you need more guidance, we can provide a professional broker for a home loan that can guide you through your options.