Buying a property is probably one of the most significant purchases you will ever make. Not only is it a major investment of your money, it is also likely to be your home for a long period of time. Getting a mortgage, especially if it’s the first time, can be a daunting thought. Not only are you borrowing a large amount of money, you are also dealing with facts, figures and the administration process.
We recommend speaking to a reputable, expert mortgage broker to fully understand the implications of taking out a property loan. However, initially the following advice will help you when it comes to understanding how to get a mortgage, so that you can start the process with more knowledge and less stress.
Understand your financial position
A mortgage is a loan from a bank, building society or other financial institution. That means you need to understand your own personal and financial circumstances before you consider a property purchase. Any mortgage offer you receive will be based on your income as well as your outgoings – the amount you spend each month or year. So writing down what you earn as well as what you spend will give you an idea of what type of property you can afford to purchase.
These days, a lender will want you to put down a cash contribution towards the property purchase, known as the deposit. This is likely to be at least 5 or 10% of the total value of the property, but it is different for every mortgage so make sure you seek professional advice from a mortgage broker before you start house hunting!
Understand credit scoring
Every time a bank or lender is going to offer you a mortgage, loan or any kind of credit, they will run checks to ensure your payment / credit history is healthy. This helps them assess the risk of loaning you money for a property purchase. Missed payments on credit cards, default payments on phone bills, or even a lack of any credit history can all have a negative impact on your ability to get a mortgage. Speak to a mortgage broker, such as one of the experts at Private Wealth Mortgages, who can advise you how to monitor or learn more about your own credit score.
Do your sums
A mortgage lender will base the offer they make to you on your own personal circumstances. At Private Wealth Mortgages, we make sure we get the full picture from our clients before searching for suitable mortgages. This means getting an in-depth understanding of their financial position as well as their goals or aspirations for the future. This is all important information when it comes to getting a mortgage that’s right for you.
Because many lenders decide how much to offer as a loan based on your income, it can be wise to calculate the approximate amount you can borrow. We offer a few different mortgage calculators that can help you assess how much you could borrow, however it is important that you speak with an adviser as well to run through other contributing factors that can affect the amount you could borrow. Click here to find out more or to enter your information.
Clear your debts
Unmanageable levels of debt such as high credit card balances, which you might find difficult to repay are considered a risk for a bank or mortgage lender. By clearing debts including loans or store cards, you show a lender that you are responsible with your money and that you are more likely to be able to afford the monthly repayments.
An inevitable part of any mortgage application is submitting financial and personal information. This includes bank statements, proof of income, proof of address, evidence of other financial commitments and possibly more. It’s wise to get your paperwork and household admin as organised as possible in advance of applying for a mortgage. And although the mortgage brokers at Private Wealth Mortgages can take a lot of the pressure of you when it comes to your application paperwork, we will need plenty of information from you before we get to that stage. Filing, requesting information from your bank or downloading statements should all be done as quickly as possible to avoid any delays with your application or accessing your funds.
When it comes to applying for a mortgage, there are a number of different scenarios that will be considered by a mortgage lender. For example, you might be self-employed with no fixed income. You could be a buy-to-let investor with several homes. Or you could be purchasing a property with a friend to enable you both to get on the property ladder. Whatever your individual circumstances, it’s important not to worry that you won’t be able to get a good mortgage rate.
At Private Wealth Mortgages, we deal with countless special and individual cases, helping all types of people to get the loan that’s perfect for them. Our mortgage brokers are all experienced and qualified professionals. Each one begins by understanding your personal circumstances before presenting the mortgage options that will fit your financial commitments, lifestyle and dreams for the future.