The Insider’s Guide To Mortgages

Unless you are blessed with wallet loads of cash, a lucratively high paid job or a recent win on the lottery, the chances are that you’ll need a mortgage when you buy a property. You know the importance of living within your means, applying to borrow a sensible amount of money and sourcing a lender that will offer you a preferential interest rate. However, have you ever thought about the intricacies of the home loan industry? Take a look at these little-known facts about mortgages and consider if you can use any to your advantage to save you money.

Credit Score

It’s vital that you live like the perfect responsible borrower for the three months prior to applying for a mortgage. Three months of bank statements and wage slips tend to be the norm for what your potential lender may wish to see. Make sure you don’t venture into your overdraft even by a penny, pay all of your bills on time and clear your credit card. By showing that you’re willing to streamline your finances, you’re demonstrating to your lender that you are serious about obtaining a mortgage.

Overpay

Most mortgages are worked out using a standard 25-year repayment schedule and allow for overpayments, usually up to 10% of the outstanding balance each year. If you are frugal with your disposable income and chip away an extra few pounds from your mortgage each month, you could repay your loan quicker and save yourself thousands of pounds in interest. For example, if you had a mortgage of £150,000 repayable over 25 years and you paid back an extra £100 a month, you’d pay your mortgage off four years earlier than expected. This nifty little trick means that you could consider being mortgage free well before your retirement date.

Source The Right Expert

Mortgage brokers and property advisors are commonplace and can be worthwhile if you need help navigating the mortgage market. Make sure you source the right expert for your situation. Ask around and see if anyone can personally recommend a broker. If you’re buying your very first home, you’ll want help from a company that specializes in first-time buyer mortgage products. On the other hand, if you’re looking to start an investment property portfolio, a company like Belgravia Property Finance, which focuses on the commercial market may be more suitable. These middlemen can provide you with essential advice and arm you with the specialist knowledge you require.

And Finally…

If you’re unsure of how much to borrow from a lender, use the one-third rule. If you can ensure that no more than 33% of your income (whether this is single or joint) goes towards your housing costs (mortgage, bills, insurances), you can be confident that you aren’t stretching yourself financially. Lenders also love this percentage and tend to work out what they may lend you based on this figure.

Although the mortgage market may be a minefield, if you arm yourself with as much knowledge as possible, you will navigate it successfully.