There’s good news for one and all: now is actually one of the best times for you to apply for a mortgage. Why? Because interest rates are at their lowest ever. There have been some instances where individuals who only have a deposit of 20 percent pay an interest rate of only 1.60+ percent for a two-year fixed mortgage, or only 2.65+ percent for a five-year fixed mortgage. But if you are thinking of buying your own piece of property and applying for a mortgage, it is always good to know what you are in for.
Assess your financial capacity
The first thing you need to do is a complete assessment of your finances. This means gauging how much deposit you can afford and if it is large enough, assessing your source of income and how long it will last, and making sure that your credit rating is good or at least passable. Also, you need to realistically determine if you can afford to settle your mortgage repayments once you do get a mortgage.
The best deposit amount? Ten percent, the experts say
The deposit you come up with can make or break your mortgage deal. As we all know, the higher the deposit you pay, the better your mortgage deal will be. Try to acquire at least a 10 percent deposit, because this is where the rates can really work to your advantage and become cheaper and less expensive. If you have less than 10 percent, you might want to wait a little longer and try to save a little more until you reach at least 10 percent of the purchase price of your dream home.
Watch your expenses for at least three months prior to your application
Nowadays, getting approval for a mortgage is said to be a bit more difficult. Not only are lenders making more computations – you will also be likely to undergo a more strenuous and highly-detailed interview where you will be asked about your finances and expenses, even the smallest committed expenditures such as a membership to the gym, insurance, or entertainment and dining out.
If you would like to lessen the likelihood of getting rejected, make it a point to watch your expenses for at least three months prior to your mortgage application. Since April of 2014, lenders have been obligated to do more detailed ‘affordability checking’, which means that not only will they have to calculate if you can afford your repayments – they will also have to calculate whether or not you can afford your repayments if the interest rates go up by as much as six to seven percent.
The importance of a mortgage advisor or broker
Don’t try to dismiss the importance of experts in mortgages such as mortgage brokers. You should speak with a mortgage broker not only because they can help you decide which mortgage deal to opt for, but also because they can actually help you find the best mortgage deal for your needs. They have information that is not readily available to others, such as the criteria of lenders, especially regarding affordability and credit. In addition to this, a mortgage broker can also help with your process of application, making it not only quicker, but less stressful as well. Good mortgage brokers – such as the mortgage brokers Essex and mortgage brokers Colchester at mortgage specialists like Flagstone – can point you in the right direction and even boost your chances by correctly matching you with the ideal mortgage deal.