Friday, 28 January 2011

How to get a mortgage?

Mortgage tips

Good credit rating
A very important thing which counts a lot when we are applying for a mortgage is a credit rating. Sometimes you might fail a credit chaeck simply because you have no credit history, not because you have a bad credit history. Lenders want to see that you will pay back money you borrow and if you have no such history in the past, they have no way of knowing. To get started with building a good credit history, the easiest way is to get a credit card. Once you will have a credit card you should use it from time to time. Just make sure you pay it back on time every month or else your credit history will backfire on you.

Paying your bills on time
Even if you are not planning to get any mortgage now and think that not paying a bill on time and paying it later won’t hurt you, you are wrong.This is how people get a bad credit rating.

Register at electoral register
Lenders are very often checking if you are on the electoral register so even if you are not interested in voting it would be a good idea for you to register.

Do not have any unnecessary loans
Lenders are usually asking if you owe any money and it can lower your ability of borrowing the amount which you want. This is because if you have already borrowed a lot of money, you will have difficulty paying back any additional loans. You should best clear all your debts before applying for a mortgage.

Share equity
This is a really good bargain for first-time buyers who do not have enough deposit. Nowadays banks are asking for at least 15% deposit which is £15k for a £100k house.  If you would buy a house from a building society, they have plenty of good deals. Many of them offer to lend you up to 25% of money for 10 years free of interest which also lets you pay a smaller deposit which can be even 5%.

Invest in a new house
New houses have 10 years warranty on them which means that for 10 years you are not the one paying for any repairs. The other advantage of buying a new house is that it is built to the latest strict building regulations which means that you will pay less for heating and you won’t find any funny things like uneven floor, crumbling foundations and outdated boiler if you would get an old house.

Deposit and mortgage deals
If you know that in one or two years you will be able to save much more money it is sometimes worth to wait this period to get a better deal and have less money to repay. When you have 5% of deposit you have access only to certain mortgage deals, while when you have 15% and more of deposit you have access to a wider range of better deals.
Additionally, some building societies or banks can offer you a mortgage even if you do not have any deposit if your family can place assets like their home as guarantee.

Look around
Do not only go to one place and stop there because they will be happy to give you a mortgage. You should check the mortgage deals in your own bank, with brokers as they can have access to deals not available for the public and finally check in companies specializing in giving mortgages. Compare all deals and decide what would be best for you.

Fixed or variable rates?
Everything depends, that is why you should compare them and find out what best suits you!

You got already a mortgage, you bought already a house and this is it? No, very often it is worth to remortgage the house as you can get better deal. Most of mortgage lenders will charge you a fee for remortgaging but it is still worth to go ahead.
Keep looking for better deals and if they become available you can switch to them!

Tax savings
It is only a possibility but you should check it for yourself. Owning a property, having a mortgage – these are areas where you should find out if you can save any money on tax, especially if you are not British, resident or domicile.


Jazzie Casas said...

2010 was kinda a bizarre year for the mortgage market. In the first half of the year, you had a decent number of home sales keeping mortgages for purchases stable, thanks to the home buyer credit. In the second half of the year, that changed as demand crumbled when the credit was withdrawn. At the same time, you had very low mortgage interest rates throughout much of the year cause a mini-refinancing boom. 2011 will look very different, as the housing demand continues to struggle and mortgage interest rates have begun rising.

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