Taking out a mortgage is a big responsibility. It not only signifies the beginning of your life as a homeowner but as someone who will always have to live up to their responsibilities. That being said, there is plenty of help and guidance out there both online and through talking to mortgage brokers. Take your time, do your research and make sure you are taking out the best product for you before you commit. To help you out, we’ve come up with a list of 5 things you need to know before you get a mortgage.
- Your Credit
To get the best mortgage rates you need to have a good credit score. Mortgage companies assess candidates based on the likelihood that they will repay a loan without problems. Given that they can’t see into the future, they use your credit score to assess the probability that you will pay up month after month. The good deals go to those who appear more likely to pay the loan back whilst those who have had struggles in the past are penalised financially. If you have had issues with credit in the past, therefore, it might be worth spending some time sorting out your credit file before you start applying for a mortgage.
- Your Budget
Mortgage companies will look closely at your budget to make sure that you can actually afford to pay them back month after month. Before you make your application, it is best to spend a few months living within a budget, making sure that the surplus you leave is enough to cover your mortgage payment. This way, you have something tangible that you can show to a mortgage advisor to prove that you can live within a budget. If you are looking for a new house at the same time, why not read out guide covering things that you should consider when looking for your new house.
- Safest Mortgages
Always do your research about any potential mortgage provider to ensure that they are reputable and not likely to go out of business. Also, be sure to read the small print before signing anything. if your broker or provider is going to add on fees, you need to be aware up front. Always make sure that you understand exactly what is on offer before committing to mortgages of any kind.
- Down Payments
Put simply, those with the largest down payments get better mortgage deals. The fact that you have managed to save so month demonstrates to the mortgage provider that you are financially smart which makes you much more likely to pay back their loan. If need be, save a bit more to secure a larger down payment for your new home.
Mortgages aren’t just about securing a new property. Many people choose to re-mortgage, which essentially means to borrow money that they have already paid back against their home once again. You can only do this if you have enough value in your home and you really should exhaust other avenues to fill your coffers if at all possible. Your home is your greatest asset, borrowing against it again should be avoided if you can.