When you are ready to buy a home, you should look around for a mortgage first and get a good idea of how much you can borrow on a mortgage and how much you can afford to spend on a house.
When you look into mortgages, there are three things you will need to secure a mortgage. Firstly you will need to be in stable employment. The longer you have been in your job, the more favourably you will be looked upon by lenders.
You will also need to show proof of income by producing bank statements and payslips. If you are self-employed you will need to show your accounts and proof of income for a period of two years usually. You should also have a deposit ready and in a savings account to show the lender.
You can shop around for a mortgage on a multitude of websites including price comparison sites that feature the latest mortgage rates available from different lenders so that you can get a good feel for the range of deals and rates that are available. Don’t forget to include any mortgage fees and arrangement fees that are charged by lenders on top of the mortgage. These fees can either be added onto the mortgage and is payable over your mortgage term or you can pay these immediately.
You should then talk to a number of lenders to understand the mortgage products that they have available. You can do this by calling the mortgage department of a lender who will have agents who specialise in mortgage product and can talk you through them over the phone. If your prefer to speak to a mortgage advisor face-to-face, you can make an appointment to go into the bank or building society‘s premises and speak to a mortgage advisor directly.
From your mortgage consultation you will need to know what type of mortgage you can have. There are fixed mortgages and tracker mortgages and a standard variable rate depending on what you want to pay. You can also choose from a repayment loan or an interest-only loan, however interest-only loans are becoming less available from lenders.
For each mortgage product from a lender, there will be a set interest rate. A fixed mortgage and a tracker mortgage, for instance, will be fixed at an interest rate for a set period of time so be clear about the interest rates for each mortgage product. You should also find out the amount in mortgage payments that you will be paying every month.
It is important to check on any fees that are applicable on a mortgage product. This includes the mortgage fee and arrangement fee as already mentioned, as well as early payment and redemption fees. You should always add the arrangement fee to the overall cost of the mortgage when you are comparing mortgages and if you decide to add the arrangement fee to your mortgage loan. This may affect the total amount that you pay back and therefore affect the mortgage choice you make.