There are a lot of complicated decisions that go into getting your first mortgage. But while the process can be complicated, there are ways to make it simpler and easier.
Here are some tips that will help you if you are looking to get a mortgage for the first time.
1 – Start with your credit score
If you are shopping for a mortgage, make sure you are on top of your credit score. Lenders will use that score to determine not only how much you borrow, but also what interest rates you’ll need to pay. And if you happen to have an excellent credit score, you can use that as leverage to get better deals. Here in the UK, your credit report is available for free online from all the major credit agencies, so there is no reason why you shouldn’t check it.
Bear in mind that a bad credit score is no reason to panic. There are companies out there that specialize in helping people with bad credit apply for mortgages and loans. If you are looking for a company like that, visit the 1st UK website.
2 – Figure out how much you can realistically borrow
There are many online mortgage calculators out there that can help you figure out what size of mortgage would fit in your budget. This is a big commitment and you want to make sure that your mortgage won’t become a chain around the neck of your financial life for years to come — or at least you want to make sure that won’t become the case by accident.
3 – Consider a smaller investment
Just because your credit score qualifies you for a big loan, that doesn’t mean you have to take it. You can settle for a cheaper house and maybe get a 15-year mortgage instead. The low rates combined with the shorter loan period can save you a lot of money throughout the course of the mortgage, and it’ll allow you to own your home sooner. Wouldn’t it be nice to be done with your mortgage payments before you get gray hair?
4 – Work on your deposit
Another way to lower the rates of your mortgage is to come onto the table with a large deposit. Interest rates are determined based on the risk that a given loan poses to the bank or the financial institution lending you the money. Since the lender gets to keep the deposit if you default on your debt, the more you are able to pay upfront, the smaller the risk for them will be, which will lower your interest rates.
5 – Research the product before you buy
Mortgages are relatively complicated, and there are dozens of different types of mortgage deals out there. Make sure you talk at length with your mortgage broker before you close the deal, and take notes so you can research the topic a little better later on. A good mortgage broker will do their best to make sure you don’t get buyer’s remorse after the deal is finished, but you can help make that easier by doing some research on your own.
5 Mortgage tips for first-time homebuyers