If you have decided that the time has come to buy your first house, the chances are that before you can make an offer on somewhere, you will need a mortgage. Taking out a mortgage isn’t always as straightforward as it seems – there are lots of ins and outs to the application process.
That’s why, as Greenaway Residential suggest, it’s a good idea to apply for your mortgage before house hunting. That way, if you find a house that you like, you don’t have to wait for your application to be approved.
To help you through applying for a mortgage, we have put together a guide to everything that you need to know:
Clear all debts before you apply
Before you apply for a mortgage, it’s a good idea to clear all outstanding debts. Often, when mortgage lenders see that you have outstanding debts, they are unwilling to lend to you. This tends to be because they are concerned that you won’t be able to keep on top of the mortgage payments. That’s why, before you apply for a mortgage, it’s important to pay off any outstanding debts.
When it comes to paying off outstanding debts, it can sometimes be hard to get them under control. The key is to calculate the amount that you owe and then work out a payment plan.
Ensure you can afford a deposit
Before you apply for a mortgage, you need to ensure that you have enough money in the bank to put down a deposit. If you don’t have a deposit, then you won’t even be considered for a mortgage.
Depending on the scheme that you go through, you will either need to save 10 percent of the cost of the property or five percent. For example, if the property cost £250,000 you would need to put down a deposit of £25,000 for a ten percent deposit scheme. For a five percent deposit scheme, however, you would only need to put down £12,500.
Choose the best mortgage for you
You may not realise it, but there isn’t just one type of mortgage, there are lots of different types. When it comes to taking out a mortgage, it’s crucial that you choose the best option for you. From mortgages with variable interest rates to ones with fixed rates, there are plenty of options to choose from.
You will find that the interest that you have to pay on top of the amount that you borrow will depend on the type of mortgage that you choose. That’s why, before settling on one mortgage type, it’s a good idea to compare your options.
If you are hoping to buy a house, getting a mortgage is an important part of that. Essentially, your mortgage will be the largest loan you ever get. So it’s crucial that you shop around and find the best provider and choose the best mortgage type.
It’s also vital, if you want your application to be accepted, that you clear all debts beforehand. As otherwise, your application for a mortgage is more likely to be rejected.