Are you a first time home buyer or you already own one but looking to downsize or move to a bigger place, the fact is that acquiring a mortgage can be difficult. Getting a mortgage is a massive financial commitment, and you might find yourself doubting if you can genuinely afford the full costs of owning a home. Also, as you proceed with your mortgage application, you will find out that the process can get quite complicated.
Firstly: What is a Mortgage?
In a simple form, a mortgage means the loan taken to purchase a property or land. Mortgages are different from regular loans as they are only focused on securing properties. This means that your lender can take back your property if you fail to keep up with the repayments. The term of a mortgage can be between 30 years or even shorter with some at 15 years. There are places to acquire a mortgage, like from a bank, specialist mortgage lender or building society. However, getting a mortgage is not as simple as it definition claims. Getting it can be challenging, as your lenders need to check and make sure you can truly afford the costs of the mortgage repayments and also maintain the property. In this blog post, we will give you a 5 simple tips that will help you facilitate this process and get approved by the bank!
Listed below are some simple tips that can help you get that mortgage:
1. Save the biggest deposit you can
Mortgage providers tend to offer their lowest interest rates for people that have large deposits. This means that most of the deals found are limited to buyers who can offer between 35% and 40% of a property’s value while people who can only offer about 10% will pay a higher rate. This is why you need to save up the deposit as you possibly can if you are a first-time buyer.
2. Know your credit score
It is very important that you know your credit score to avoid any surprises. You need a good credit score to get the best deals. You can check yours on Credit Karma for free. There are a bunch of other website out there that offer this service now so you could always do a quick google search if you want to but I personally like Credit Karma.
3. Pay off unsecured debts and close any unused accounts
One of the things your lenders will consider is the total amount of credit available to you and the amount you owe. So, it is essential that you clear as much of your debt as possible and also close any account you are not presently using. Otherwise, your lenders might consider you ineligible if they find any of this. I read somewhere that closing your credit cards actually negatively affects your credit however, since I don’t work for any credit agencies I can’t say how much this is true or not but I do recommend paying down as much debt as possible because they will definitely consider how much outstanding debt you currently have during this process.
4. Avoid unusual properties
Mortgage lender wants to make sure that they can get their money back and this is why you need to choose a property you can pay back on. If lenders find out that you won’t be able to pay back for a particular property and if it is harder for you to resell it at a later date with appreciation, they might decline your application.
5. Be prepared with all documents
For any mortgage lender to take you as a customer, you will have to prove yourself first. So, make sure you have an up to date passport, drivers license and any other document you will need to provide include a recent letter.