We know that mortgages can seem overwhelming at best, daunting and scary at worst. But getting a mortgage really isn’t as tricky as you might think.
In this article we go through what a mortgage is and the process of getting one, to take the trick out of getting the home of your dreams!
What is a mortgage?
Put simply, a mortgage is a loan given by a bank that can be used to buy your home. When applying for your mortgage, you’re normally required to put down a deposit of at least 5% of the house’s value, and then pay for the rest of the house using your mortgage loan. Then, once the house has been bought, and everything is in working order, you’ll pay monthly repayments to the lender to cover the cost of the loan plus interest.
Where do I start?
Knowing where to start is where most people get spooked! Before you begin choosing the perfect property, it’s always best to check how much you can borrow, so you know the kind of houses that are in your price range. Why not use our borrowing calculator to see how much you could borrow? You’ll need to fill in a few details such as your annual salary and deposit amount to get a rough estimate of how what you could borrow- but beware, this is an estimation and shouldn’t be considered a mortgage offer.
Another way of getting mortgage ready is to get a Mortgage in Principle, also known as Decision in Principle. But what is a Decision in Principle? Essentially, this is a statement from a lender saying ‘in principle’ how much they are willing to lend to you, based on the information you provided.
However, this isn’t a mortgage offer and your lender will still require you to submit a full application.
So, what do lenders look for when reviewing my mortgage application?
When viewing your mortgage application lenders want to be sure that you’re a low-risk borrower so will need to check a few things before agreeing to lend the money to you:
- Income and outgoings- lenders will weigh your income against your outgoings to make sure you’ll have enough money each month to keep up with your monthly repayments.
- Credit checks and debt- here’s where it could become tricky. Don’t hide away from the skeletons in your closest, confront them head on! If you do have any skeletons in your closest, like bad credit or debt, it’s best to get it all paid off. By paying off your debts, it shows your lender that you can handle your money responsibly.
Speak to an adviser
If the thought of a mortgage still freaks you out, speaking to one of our advisers is a no brainer! Our advisers are on hand to help guide you through the process by dealing with all the paperwork because we believe that teamwork makes the scream work!
Getting a house should be a fang-tanstic experience so get in touch if you want help securing your dream home- happy house haunting!