Top 4 Mortgage Tips for First Time Buyers
The idea of getting the keys to your first house is fantastic, but you must first go through the mortgage application procedure. Before submitting a mortgage application, every first time buyers should be aware of these simple tips.
Although getting a mortgage can be daunting, buying your first home is a wonderful milestone. You can get good deals by taking a few easy steps, such as determining how much mortgage you can afford and searching around. Read four tips and strategies that may improve your chances of getting a great first time buyer mortgage deal by reading on.
4 Helpful Strategies For Getting an Amazing First Time Buyers Mortgage Deal:
#1 – Determine Your Mortgage Budget:
Reviewing your finances and determining how much you can borrow before applying for your first mortgage is a good idea. It’s because mortgage lenders must assess your ability to repay the loan by performing an affordability check.
To determine if you can comfortably make your mortgage payments both now and in the future, if your circumstances change, they will consider your income, expenses, and credit history.
You can better understand your monthly mortgage financial requirements by making a budget. Look at your credit card and bank statements from the past few months and make a note of your:
- Income: Your salary, including any maintenance payments, bonuses, and benefits.
- Essential Expenses: Rent, utility bills, food, and travel expenses.
- Non-essential Expenses: Hobbies, socialising, vacations, and all other types of leisure.
- Debt: Any loans, credit cards, or overdraft credit repayments.
- Savings and Investments: Deposits made into a savings account, an ISA, or a portfolio of investments
#2 – Save Up Your Deposit:
When you apply for a mortgage, the lender will require a house deposit equal to at least 5% of the property’s value. However, building up a more significant down payment can make it easier for you to get better mortgages with lower interest rates. Less money must be borrowed from a lender and accrued in interest the more money is paid upfront.
To determine how much of a down payment you’ll need to save, research the types of properties you’d like to purchase. Using average home price data might also help you acquire a ballpark amount if you need help determining where you want to buy. A 5% deposit would cost £13,500, while a 20% deposit would cost £54,000, with the average cost of a home in the UK at around £270,000.
#3 – Check Your Credit Score:
Before submitting a mortgage application, it is imperative to review your credit score. Your credit score provides a brief overview of your borrowing and repayment management history. When you apply for a mortgage, the lender will analyse your credit to see whether you are a reliable borrower with a solid track record of repaying what you have. A better credit score increases your chances of getting a mortgage approval, while a lower credit score decreases those possibilities.
A high credit score shows lenders that you have a solid history of timely debt repayment. On the other hand, a low credit score suggests that you could require assistance in the future to make your repayments. It will be beneficial to spend time improving your credit score if you have a bad credit history or no credit history to increase your chances of being approved for a mortgage.
#4 – Apply for a Mortgage in Principle:
It makes sense to apply for a mortgage before you start browsing for residences and comparing mortgage offers. An agreement in principle (AIP), also known as a mortgage in principle (MIP), is a document from a lender that indicates the maximum amount they are ready to offer you for a mortgage based on the data you submit.
The principle is based on your information and does not represent a formal mortgage offer. They are usually used to show the seller that you might be in a stronger financial position than you initially suggested.
For the reasons mentioned above, a mortgage is technically not legally binding, yet it can greatly increase your buying power. It may increase your chances of getting an offer accepted by showing to real estate brokers and sellers that you are a serious buyer.
In principle, a mortgage may last anywhere from 30 to 90 days. Depending on the lender, you can reapply to start negotiating conditions after the agreement expires.
A mortgage expert can facilitate the process by matching you with the best lenders based on your financial situation. The fee that mortgage advisors and brokers charge might range from £500 to £1,000, depending on the size of your mortgage. Hire Mountview Financial Solutions to get proper mortgage advice for first time buyers at an affordable rates.