Things to consider when looking for a mortgage
Looking for a mortgage can be an exciting time but also stressful and challenging too. There are many components involved with finding the mortgage that is right for your needs. You need to make sure that you are on top of the entire process too.
What is your credit score?
Before you start focusing on lenders, it is best to consider yourself and your own personal circumstances first. There are a number of factors that will impact on the finance levels you can expect to receive but your credit score is crucial to this process, right from the start.
This is why it is important to find out what your credit score is, and then think about what this will mean with respect to the mortgage you are likely to be offered. There are free ways to finding out your credit score and the results you receive may not be universal. All credit experts have their own way of calculating a figure, but it is likely to be in the similar ball park, so you will have a starting point to consider whether or not a lender will approve any application.
You should be proactive in repairing your credit score and if you feel that you can positively impact on your rating within a few months or a year, you may want to revise your plans to apply for a mortgage now.
Raise a deposit
Depending on what mortgage you are offered, you may be asked to provide a deposit at 5%, 10% or even 20% of the overall property price. The more money you can provide as a deposit, the better it is for you, but if your mortgage is dependent on providing funds up front, you need to make sure that you can do this.
Think about the choice of lender
Once you have focused on yourself and thought about the sort of style and general price of property you are looking for, you should start to look at your choice of broker or bank. Not all lenders are the same, so make sure you check out what different lenders have to offer. It may be that there is one lender that is not on the High Street which can provide you with a better rate.
Don’t just focus on the interest rate
It is easy to see why many people are keen to focus on the interest rate of a mortgage, but this doesn’t always tell the full story. This means that you should be wary of thinking that the lowest mortgage rate provides you with the best deal. It is possible for lenders to artificially reduce mortgage rates by introducing adjustable rate features or by utilising discount points. In brief, you need to check all of the terms and conditions to ensure that you are comfortable with what is on offer.
The APR will not tell you the full story either
Similarly, many people focus on the APR when looking for a mortgage but this won’t tell you everything you need to know either. An APR will not provide you with information on how fast a mortgage principal can be paid down.
Other things to consider include:
- How long you expect to live in the home?
- While low payments are affordable, is there a long-term implication of using them?
- What are the closing costs associated with the financing option?
- Always focus on the total cost including all charges and fees.
To discuss any of these points further with our independent mortgage advisor just call 0115 853 2199.