Applying for a mortgage
is not as difficult as many people will have you believe. However,
before applying for a mortgage there are a few things you will
need to consider. These include:
What
type of mortgage best suits your financial situation?
What method of repayment is best for you?
How much can you afford?
When applying for a mortgage the lender will require various documents in order to identify who you are and examine your credit capabilities. It is therefore a good idea to have these ready when you go to see about getting your mortgage as it will speed up the process of application and give you a solid understanding of what the lenders are willing to offer you. The most common items that your lender may request are as follows.
Your
passport and National Insurance number.
Your employer's name and phone number.
Proof of your monthly income including salary wage slip, pensions,
alimony, investments, rental income, etc.
Your monthly expenses including bills, bank account statements,
mortgage payments, etc.
Your assets including, bank account balances, deposits, property.
Your liabilities including credit cards, car loans, other loans.
Where applicable, the above details for your co-applicant as well.
There are numerous types of mortgages available and there may appear to be a huge number of options available to you however they are all constructed around the same key areas. In order to understand exactly what you're getting from the lender you should identify with 3 key headings. These include:
Mortgage
types
Mortgage Repayment methods
Mortgage Interest Rates
Most mortgages you can pay off early however, be aware that depending on which type of mortgage you have, there may include certain clauses that enforce a specific amount of time before you can clear your mortgage balance. This is known as an Early Repayment on the mortgage. This means you need to pay a sum of money to effectively, buy yourself out of the mortgage contract early.
Our
mortgage calculators will help you find out how much you can afford
for your mortgage. Try putting in different payment amounts, interest
rates and repayment periods to see what combination suits your
needs best. At the end of the day, what you can afford is not
completely up to you. The lender will perform an assessment and
take into account your earnings and monthly outgoings before deciding
the amount of money they are willing to lend you.
A deposit is a portion of the purchase price of a property that you provide. The deposit can alter many features of your mortgage. For example, if you put down a larger deposit the lender may be willing to offer you a lower interest rate. You will still need money for your solicitor fees, valuation fees and settling into your new home, so putting every penny into your deposit may get you a lower interest rate but may not be the best option.
Yes,
you can. In fact you can under certain circumstances get a mortgage
for as much as 125% the value of the property. This makes it easy
for buyers with no equity to purchase a home. However, 100% +
mortgages will often come with higher interest rates and can make
your monthly payments a lot higher than if you had a reasonable
deposit. It is therefore worth considering saving a reasonable
deposit for purchasing your home.
In addition to the initial costs such as legal and valuation fees and mortgage administration fees you need to prepare to pay for monthly outgoings you probably never had before or proving more expensive than the last property you owned. These will include:
the
mortgage payment
property taxes
electricity
gas
oil
phone bills
utilities
If you don't budget for them correctly you may get a financial surprise later. Estimate realistically what your expected outlay will be each month. Overestimate rather than underestimate everything and you will have a good idea of what you can afford. Putting the time into calculating your monthly financial outgoings at an early stage can make life a lot easier in the long run.
The repayment period is the term over which you have to repay the property. The most common mortgage periods are 25 years, however it is possible to get longer terms, or indeed shorter terms, depending on your financial stability and the cost of your property.
Due to the increase in house prices it is now becoming more common for people to take mortgages over periods as much as 35 years. Bear in mind that this is a huge commitment and that you will pay much more interest than a shorter-term mortgage. You may also find yourself in negative-equity for a longer period of time especially on mortgages that exceed the true current value of the property. Negative-equity is the period of time that you owe more money on the mortgage than the property is actually worth.
There is no maximum for how many times you can remortgage your mortgage to apply for more funds or benefit from lower interest rate. You must re-qualify each time you apply with respect to your ability to repay and the value of the property may have to be re assessed depending upon the time you have been in the house and the loan sum secured on it.
There may also be clauses written into your mortgage contract that require you to pay an early repayment charge.
Early Repayment Charge is a charge made by your mortgage lender which is payable on certain types of loan. The charge is only applied if the loan is paid off or part-paid off within the specified early repayment charge period agreed with you at the outset of the mortgage being set up. This is possibly the downside of benefiting from the certainty conferred by fixed rate or the cheaper mortgage offered by a discounted rate Some lenders can lock you into a repayment charge so beware and get advice. If you see an incredibly good interest rate below the rate prevailing on variable rate the chances are they want something in return - your commitment, therefore it could mean it'll cost you a lot more if you decide to move lender in future.
DIY is becoming more and more popular whether it be making improvements to your own home, planning the next big project or watching many of the numerous TV programmes dedicated to helping us make the most of our properties. There are a number of ways by which to employ a cost-effective way of raising funds for home improvements.
Due to the buy now, pay later nature of our society, many people borrow what is needed for home improvements as opposed to saving in advance. There are many ways of borrowing the money you need for home improvements depending on the size or scale of your project.
For smaller projects, you may decide to use credit cards or perhaps an overdraft, however, for much larger projects e.g. a conservatory, a loan will be more suitable. Although personal loans can be easy to arrange and the term of repayment determined by you, the interest rates applicable will generally be higher than that of mortgage interest rates
This leads to the option of considering re mortgaging. By switching your mortgage rate, you may be able to stay with your existing lender and see what they can offer you or move to another, more competitive lender. Not only may re mortgaging help you find a lower rate of interest, but re mortgaging also enables you to release equity in your property, as chances are your loan to value (LTV) will be lower than when you originally took out your mortgage. In other words, the value of your home in proportion to your mortgage debt will probably have increased.
This could be as a result of either the value of your property rising or that some of your mortgage has been paid back or indeed both.