A recent industry survey1 showed that 41% of people feel stressed by the mortgage process, taking the fun out of looking for a new home. Although applying for a mortgage can involve alot of paperwork, and the new affordability rules introduced by the industry regulator in 2014 mean borrowers face many more detailed questions before receiving a mortgage offer, becoming stressed and viewing the application process negatively needn’t be the case. If you follow these top tips you can stay in control, save money and enjoy the experience.
SAVE, SAVE AND SAVE
In most cases, the bigger the deposit you can put down and the less you need to borrow, the lower your interest rate is likely to be. Don’t forget that your savings will also need to cover other charges like legal fees and survey costs, so budget for them to avoid any nasty surprises.
It pays to take a long hard look at your income versus your outgoings; any lender considering your mortgage application will expect you to be on top of your bills and to be able to afford your monthly mortgage payments. Check your standing orders and subscriptions and cancel any you can manage without. Also, keep a keen eye on how much you spend on luxuries like entertainment and meals out.
GATHER YOUR PAPERWORK
Start by getting hold of your last 6 months’ bank statements. You’ll also want to gather your payslips from the last few months. If you’re self-employed, collect together three years of accounts or SA302s tax returns.
CHECK YOUR CREDIT SCORE
Lenders will expect you to have a healthy credit score. A higher score usually means you are a lower risk; the more points you score the better the chances that you’ll get credit at better rates.
GET PROFESSIONAL ADVICE
Getting advice will save you time, money and stress. By putting your faith in an experienced professional you can rely on, you can help ensure the transaction goes through as smoothly as possible. Independent Mortgage Advisers are on your side, they can guide you through one of the biggest financial decisions of your life, they have access to a wide range of mortgage deals, know the industry and can offer useful advice on all aspects of the home buying process. They can help you get an in-principle decision from a lender, which gives a seller the confidence that you are a serious purchaser.
CALCULATE WHAT YOU CAN AFFORD TO REPAY
There’s no point going for a 2.5% mortgage now if you can’t afford a 5% interest rate on your borrowing further down the road if there are a series of interest rate rises.
KNOW YOUR ESTATE AGENT
First-time buyers with mortgage offers in place are attractive to sellers as they can proceed more quickly than another buyer who has yet to sell. Make sure that the estate agent is aware of your position, so they can pass this information on to sellers. Keep in regular contact and build a rapport with the agent.
DON’T FORGET THE SURVEY
Once you’ve found somewhere you want to buy, make sure you get a professional survey. A surveyor will identify structural problems that could be expensive to remedy.
1Trussle, April 2018