Getting a Mortgage for Your Home
Thinking about getting a mortgage for your home can be a daunting experience, particularly if you’re a first-time buyer. Equally, these feelings of anxiety have only worsened as the economy has continued to struggle and many have become increasingly wary about their financial situations. But what is it that you should be looking out for in a mortgage and what’s the best way to go about getting the best mortgage deal available to you?
Firstly, you will need to find yourself an Independent Financial Advisor (IFA) and this will involve a lot of shopping around. While you may think you’ve found the best deal at one place, you do need to look around for other quotes and to take advice from an independent, unbiased advisor who specialises in mortgages and can give you advice based on your own individual circumstances.
How to find an IFA?
Your search for an IFA will depend on several things, including where their expertise lie, what recommendations they have and their location. Try and find three IFAs that you think are worth contacting and speak to them all about their charges and what they can do for you. You may find that several of the firms that you find have a price list so you will be able to get a rough idea of how much their services cost compared to other firms.
When speaking with an advisor always make sure you are 100% certain on what they are telling you; they are there to advise you, so if you don’t understand something, ask. Most importantly, make sure you are comfortable speaking to this advisor as you are going to have to discuss all of your finances with them, and you will regularly be in contact with them through the buying process.
How much can I borrow?
Your IFA will need to see several pieces of information from you as they need to be sure that you can afford to go ahead with getting a mortgage. They will normally ask to see bank statements from the last three to six months and wage slips from the last three months. Once they are aware of your income and outgoings they will be able to provide you with advice on your deposit and what you can expect to be paying on a monthly basis for your mortgage.
Larger deposits have been required recently, which have been around 25% in order to get the best rates available from your mortgage lender. However, if you only have a 10% deposit saved up you will find that you are paying a much higher premium rate. Additionally, if you are looking at a 10% deposit you will also need to ensure that you have a clean credit history as lenders require a higher credit score.
Getting your application processed.
Your application could take up to ten weeks to be processed, which may seem a long time but with the different parts of the assessment process in place, it can take longer than you may have first anticipated. Things such as the lender organising a valuation on the property you wish to buy, the valuer drawing up a report for the lender and the lender considering your application all occur before the paperwork is passed onto your solicitor where it can take up to six to eight weeks for them to carry out all the legal processes for getting the house listed in your name and sorting out your mortgage funds.
What are the costs of a mortgage application?
Lenders will often charge an administration fee for the processing of your application; this may also be known as an arrangement fee or booking fee. This is charged in most cases at a fixed rate and could be non-refundable. Currently, you can expect to be paying anything from around £1,000 – £2,000 as they have risen in price. Some lenders will allow you to add this to your loan so you don’t have to come up with this extra cash, so it’s always worth asking.
When will I have to pay my first repayment?
This is something you will have discussed with your lender and you will have agreed on a specific date to begin your repayments. A lot of people choose to have their mortgage payments going out at the end of the month so they have been paid before they have to find the money for their mortgage.
One of the biggest risks of getting a mortgage is the repayments; if you can’t afford them then you risk repossession of your home. Always make sure you can afford your mortgage before getting one and if you do get into any difficulties you should always speak to your lender or broker before you have missed a payment. You may find that they are able to get your monthly payments reduced so that you are more financial stable.
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