Mortgages can be complicated and time consuming so to avoid stress and disappointment when making an offer on your dream home, sort out your mortgage as soon as possible!
Start by achieving a decision in principle before you go house-hunting. It could also help you find out how much you can borrow and focus your search on properties within your budget. Plus, having your finances in order means you’ll get a head start over other potential buyers and avoid any issues or delays when buying your new home.
Mortgage interest rates
There are many types of mortgage interest rate – including discounted, tracker, standard and variable rate – but here are the main ones:
- Fixed rate: Your mortgage interest rate and monthly payments will stay the same for the entire period of your deal, regardless of the market interest rates. After a certain number of years – usually between two and five – when you reach the end of your fixed term you can either remortgage to get a better deal or you’ll move to the standard variable rate (SVR) which is usually higher than your previous rate. This tends to suit people who need a known repayment amount on a fixed budget.
- Variable rate: Your mortgage interest rate can change at any time. This means your payments will also fluctuate as the base rate changes; you can benefit if your rate drops, but you’ll have to pay more if it goes up so you need to have the headroom in your finances.
What mortgage can I afford?
To find out how much you can afford to borrow, you need to understand how lenders work out the amount you qualify for. There are a lot of lenders out there and to find the one who’s the best fit for you, using a broker can save you a lot of time and energy.
Lenders will run affordability checks to review your income and outgoings and also take into consideration the size of your deposit. Checks might be slightly different for each lender, but the aim is the same – they need to ensure you’re a reliable borrower who’ll be able to repay them.
How to get a mortgage
After finding a mortgage deal you can afford and considering mortgage fees and costs, you’re ready to confidently complete your application. To make sure it’s successful you also need to ensure you have a good credit score and your finances are in order.
Don’t panic if your credit score isn’t the best or if there is certain adverse on your credit file, an FCA registered mortgage broker will lead you through the process, while a conveyancer or solicitor will help you with the legal side of buying a home.
Apply for your mortgage
To proceed with turning your pre-approval into an official mortgage offer you simply need to complete a full mortgage application.
If you’ve already got your decision in principle, you’ll have a head start as you’ve already covered much of the application. In the loan processing stage, you’ll need to provide evidence of your income, identity, and current address. An underwriter will verify your information and consider your application, but timings vary from lender to lender. Your Broker will have closer access to the lenders for feedback on your application than going direct and this can therefore save time and even speed up the process.
Mortgage Offer
If your mortgage application is successful, you’ll receive an offer from the lender. Congratulations! You’ll then need to read through your contract’s terms and make sure everything is clear. You will have a cooling off period from the day your mortgage offer has been issued.
And that’s it. You officially have gone through the mortgage process. The rest of your journey is now with your estate agent and your conveyancer for you to complete. Good luck.
