8 Things To Remember When Taking Out Your First Mortgage
Taking out a mortgage is a huge financial commitment, and it’ll probably be the biggest one you ever make. Finding the best deal is imperative to ensuring you’re comfortable throughout the life of your mortgage. Here, we’ll go through 8 things to remember when taking out your first mortgage so you can get the best deal possible:
- Consider Your Credit Score
First, consider your credit score and get a copy of your credit report so you know what’s going on there. There are plenty of simple things you can do to give your credit score a boost, but it all depends on your own score. Make sure you look out for mistakes, as they are possible, but it’s also possible to rectify them.
- Work Out A Budget
Your own maths matters here, as you’re going to need to come up with a budget that suits you down to the ground. It isn’t uncommon for people to be offered larger mortgages than they really need, so knowing what you can comfortably afford is crucial. It will all depend on how much you want to borrow and over what time period, as well as the interest rate.
- Don’t Switch Jobs – Yet
If you’re thinking of getting a new job, it’s probably better to hold your fire until you have your new house sorted. It looks far better to mortgage lenders when you’ve spent an extended period of time in the same job. It’s not a total no-go, but if it’s an option for you, waiting could be worthwhile.
- Sort Out Your Debts
Submitting your mortgage application with debts to your name isn’t going to do you many favors. A lender won’t want to see that you have many outstanding credit cards or loans, as it could mean struggling to pay your mortgage loan back to them. Even if you can pay it back, it can also indicate that you can’t manage your money that well, and they may deem you a bigger risk and increase your interest. Reducing your debts as much as you can before you apply for your mortgage will give you a greater chance of being accepted, and of getting a better rate. Remember, you’ll also need proof of your income in the form of your p60 from your employer and your bank statements. You really can’t lie about the financial situation that you’re in. If you’re self employed, you’ll need your accounts for the last 3 years.
- Putting A Big Deposit Down Is Best
It’s always possible to get a mortgage and put the bear minimum down as a deposit. Many people do it. However, putting a bigger deposit down is always the best course of action. You’ll get a far better rate if you can put down a bigger deposit, and the result will be lower monthly repayments. If you can pay more down at the start, then do so.
- Buying With Someone Else May Be Easier
Buying with another person can be the smartest thing to do if you feel you’ll struggle to get a decent rate or save up for a decent deposit. If they have a higher income and a good credit rating, that’s even better. However, this is a huge commitment, so not one you should take lightly. You’d need to discuss what would happen if one person wanted to move in future, what you will do about shared belongings, and anything else that could be a huge obstacle.
- Factor In Costs That People Often Forget
Buying a house is so much more than the deposit. There are many costs involved that people often forget. This can depend on where you are in the world, but you’ll have things like stamp duty, solicitor’s fees, a survey fee, and numerous other fees before you can even move into the house. It’s also worth noting that if anything changes or the sale falls through, you will lose much of the money from the fees you have paid. Here’s an idea of what they could cost you:
- Valuation – $500
- Legal fees – $2000
- Broker fees – $1000
There are more on top of that too, but again, it depends. The most important thing is to have more money than you think you need.
- Working With A Mortgage Broker Could Be Beneficial
A mortgage broker is there to give you advice and help arrange the mortgage for you, although you don’t have to work with one. They deal with pretty much everything until your deal is sent out to the lender.
Photo by bongkarn thanyakij from Pexels
Contributed posts are written by third parties and contain affiliate links. Woman Around Town receives payment for sales through the links.