Tips for Getting a Mortgage

Before you start the application process, you’ll need a thorough understanding of the mortgage market.
1. Do your research
Reading up on key mortgage terms might not sound like much fun but you’re unlikely to get the best if you don’t know the difference between a fixed rate mortgage and a tracker.
If you’re a first-time buyer, you might want to get informal advice from friends and family who have bought their own homes. Bear in mind, however, these people are unlikely to be qualified financial advisers and you shouldn’t rely too heavily on their advice.

2. Consult an independent mortgage broker
A specialist broker can answer any questions about the mortgage process, help you hunt down the best deal and warn you about hidden loopholes.

3. Put money in the bank
The credit crunch brought an end to the carefree days of 100% mortgages when people didn’t even need to put down a deposit to buy their property. These days, potential homeowners will need a sizeable lump sum before they can buy.
It is vital that you scrimp and save as much as you can to build a deposit nest egg. You could set up a direct debit to make sure that a portion of your salary goes into a separate savings account each month. Remember to choose an account with a competitive interest rate to make the most of your money.

4. Raid the Bank of Mum and Dad
Despite their best efforts, plenty of people are only able to get onto the property ladder by accepting help from their parents. If you are having trouble getting your deposit together, discuss your options with any family members who might be willing to help. However, you should always consider the impact this arrangement will have on your relationship.

5. Find the right property at the right price
Tennis courts and acres of land might be features of your dream house but most of us need to make compromises to find a property that suits our bank balance. You’re unlikely to get a mortgage on a home worth £500,000 if you’re earning £20,000 a year!
You should also think carefully about any other factors that affect property value. For example, being within the catchment area of a good school causes house prices to rocket. Even if you’re not planning to start a family, it’s a good idea to visit the Ofsted website to research local schools.
Alternatively, high crime rates can cause prices to plummet. To find more information on crime in your area, you should check out the Neighbourhood Statistics website.

6. Check your credit rating
Before you approach a potential lender, you will need a clear understanding of any factors that could damage your chances of getting a mortgage.
The best way to do this is by checking your credit rating with one of the UK’s three credit referencing agencies .If your credit score is low, don’t panic. There are a number of steps you can take to improve your result. You can increase your score just by registering on the electoral roll and making sure you pay your bills by the due date each month.

7. Look out for loopholes
It’s an old chestnut but if something looks too good to be true, it probably is. When applying for a mortgage deal, you need to go through the details with a fine tooth comb and make sure you’re aware of the terms and conditions.
Just imagine you take out a deal with an initial low rate of interest. It might seem like a bargain at first but what happens when the introductory rate expires? You could end up with an uncompetitive rate or having to pay a hefty penalty if you leave your lender.
Again, seeking advice from an independent mortgage broker should help you avoid these pitfalls.

8. Boost your equity
If you already have a mortgage, now could be the right time to remortgage as competition heats up on the mortgage market.
If you are considering remortgaging your property, you’ll get a more competitive deal if you have a high amount of equity in your home (the difference between the market value of your property and how much is left to pay on the mortgage).
There are simple steps you can take to build up your equity such as overpaying your mortgage each month. However, remember to make sure your lender won’t penalise you for this. Alternatively, you could increase the value of your property with home improvements.

9. Shop around
As with any financial product, you should never accept the first deal you’re offered. You’re much more likely to find a mortgage that suits you by approaching a range of lenders. One of the easiest ways to compare available deals is by using an online price comparison site.
Yet again, don’t forget to speak to an independent mortgage broker before taking any drastic action.

June 2, 2010