As the weather gets nicer, many UK consumers are shopping around for a mortgage. It’s been written up in the press that now is the time to buy, but are you really ready to shop around for a mortgage? Yes, you read that correctly: shop around. Going to the first company with a nice banner or advertisement in the paper is a recipe for disaster. You want to be comfortable with the process inside and out and make sure that you’re really prepared to become a homeowner.
The truth that owning your own place is a lot more difficult than people let on. You’re going to be completely and totally responsible for the insurance as well as the maintenance. This means that if something breaks, it’s going to be up to you to fix it…with your own money. Gone are the days of just calling the landlord and hoping that they will be out soon to fix it. You have to make sure that you’re really going your own way on this. That’s the only way that you’ll really be able to enjoy your home. The thing about home repairs is that they can really sneak up on you…but we’re getting ahead of ourselves.
Going back to the mortgage side of things, you want to make sure that your credit is where it needs to be. Generally speaking, the best mortgages go to the people who are paying their bills on time, every time, every single month. It also goes to the people who have a long history of being at the same place of employment. The key here is stability — you have to have it in order to get the best rates offered to you. Just having good credit isn’t enough. You have to be willing to show that you’re actually trying to put down serious roots. The lender will give you the best rate if you can prove all of this. However, if you just started at a job and you only have a few years at the same place, you still might get a good rate. It also depends on how much you make. If you’re bringing in good money and the job feels solid, the lender may let you get away with a higher loan amount than someone else.
Make sure that you’re considering saving as much as possible as well for the house. The more that you can save, the more likely it is that you’re going to be able to get a better rate and a higher loan amount. This is because you’re showing the lender that you’re truly serious about owning a home.
The more that you can save, the less likely it is that you’ll have to pay mortgage indemnity insurance. This is a fee that’s tacked onto your mortgage that basically benefits the lender without benefiting you. It’s done so that the lender can allow you to get a home with just 10% down, which might be necessary depending on which housing market you’re buying into. Still, if you can avoid extra fees then this is what you will need to look into.
It bears repeating: before you commit to any mortgage, it’s very important that you read the fine print as much as possible. Is there an early repayment penalty? When will the mortgage payments be expected every month? Is there a discount for direct debit? These are all questions that you will need to ask the lender before you get fully committed. Good luck!