We are currently working towards applying for a new mortgage, we’re aiming to do this in Spring 2021 but we’ve been working towards it for years! You may be surprised by the amount of time and effort we’ve already been putting into this, but in my opinion, you can never start preparing too soon.
A mortgage is probably the biggest loan you will ever apply for. It usually involves borrowing a large sum of money in order for you to be able to afford to buy a house. The loan is always secured against the property, so if you fail to pay then the bank can reclaim the property and sell it in order to recoup their costs. That’s actually a pretty scary thought! But, a mortgage is usually the only way the vast majority of the population could ever afford to buy a house. There are very few people who can afford to buy a house outright.
Because a mortgage is such a huge financial obligation, I think it’s really important to plan your application well in advance. This gives you the best chance of getting a good interest rate and will also mean that you’re better prepared for making the repayments and avoiding the dreaded repossession.
1. Save, save, save
Although you’re likely to need a mortgage in order to buy a house, you want to avoid taking out a huge mortgage that you’ll struggle to repay. Make sure you start saving money as early as possible so that you have as much money available for a deposit as possible. Not only will this mean your mortgage is less, but it will also show lenders that you’re able to save money too.
It’s always a good idea to play about with your figures and see how much less your monthly payments would be if you could save up a bigger deposit. You can use a mortgage calculator to help you to get a feel for what you’ll be paying out each month depending on the size of your mortgage.
2. Clear your debts
You don’t need to be debt-free in order to be accepted for a mortgage, but if you do have debts, then it’s a good idea to get those totals down if you can. Owing large amounts of money will mean that you’re not able to be accepted for the best deals when you apply for a mortgage. It may also signal that you don’t manage your money very well. If possible clear your debts completely before you start the application process.
3. Know the score
Do you know your credit score? If the answer’s no, then now is the time to find out. Mortgage lenders will check your credit rating before they either make an offer or decline your application. The better your financial history, the better your chances of getting a mortgage. It’s a good idea to start thinking about this well in advance of applying for a mortgage as it takes time for credit scores to improve.
4. Do your research
You need to spend some time researching before you apply for a mortgage. You need to know the property prices in your area so that you can have a realistic idea of the type of property you can afford to buy.
It’s also a good idea to research mortgage brokers in your area so that you can work out whether using one is right for you. For example, if you’re self-employed, then using a broker who specialises in this area could boost your chances of getting the best deal.
5. Keep your paperwork in order
When you finally come to apply for a mortgage, there are a number of things you’ll need to produce. You will usually need proof of identity, proof of address, pay slips, bank statements and recent P60s. Spend some time making sure you have all of these so that you’re not hunting around at the last minute.
Applying for a mortgage is a big deal! But, you can make the whole process a lot easier simply by getting prepared in advance.