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In the last year the economic downturn has changed the face of the mortgage industry some claim for good. Banks and other lenders have cut mortgage lending severely and finding a mortgage is no longer an easy task.
Buying a house is one of the biggest purchases we make in our lives and picking the right mortgage is essential. Here is the conundrum: fewer lenders mean lesser choices, so in these tough economic times how do you still get the best mortgage deal. Below we will provide you with 10 valuable tips that will help guide you to your dream home and help find you a suitable mortgage.
1. Do your research well
There are some really good mortgage brokers that will tailor-make a suitable mortgage plan for your needs. However, before you go to one of these brokers do a little research on the internet to see what your options are, in addition, this gives you a better understanding of how things work.
2.
Check mortgage fees closelyIt is extremely important that you understand and calculate the percentage interest fees on your mortgage but also other costs associated with taking out the specific mortgage.
3. The bigger the deposit the better your options
In these tough times to make your lender feel safe and to be able to give yourself as many options as possible, it is better for you to have a large deposit, preferably 25% of the total mortgage. A bigger deposit sum almost guarantees a wide variety of choice.
4. Clean credit rating
The worst affected area due to the credit crunch is the higher risk mortgage market. What does this mean? It means that people with a bad credit rating will have a tough time getting a suitable mortgage deal.
So, before you start hunting for a mortgage check your credit rating with the various credit reference agencies, if there are dark patches try and clear them, this will immensely improve your choices. Voting helps. Make sure that you cast your vote in the next election, absence from voting can also effect your credit rating.Â5. Check for flexibility of the mortgage
There are many different types of mortgages, some allow you to overpay and with some you can underpay or even take a payment holiday. If you have a choice, choose what suits your future needs the best.
6. Type of financing
Decide on what type of financing you are looking for, short term or long term, interest-only or capital payment, fixed or flexible rates. If you are looking for security and a guarantee of what your payments will be for the set period; choosing a fixed rate mortgage may not be a bad option. The market is still very vulnerable and flexible rates can be viewed by some as risky.
7. Time Duration of the mortgage
The shorter the term the better it is for you in respect to the amount of interest you will pay. If you choose a longer term mortgage it means that you will also be paying a lot more in interest, making the total cost higher.
8. Overpayments
Flexible mortgages allow overpayments which can substantially reduce the term. If you can afford to make overpayments whilst interest rates are low you will reap the rewards in years to come. Some mortgage lenders have overpayments suspended in their accounts for an entire year and at the end of the year they credit the money to your account. Using this method they earn extra interest on your money. So check your policy well.
9. Never lie
If you lie about your credit history, chances are the mortgage lender will find out about it and that will significantly reduce your chances of getting the mortgage. Honesty is the best policy, address the issues you may have and provide evidence to support your suitability.
10. Application process
Make sure you read everything on the application form. Mortgages remain with you for a long time, so take your time and read and understand everything before you commit.
It is possible to still find the correct mortgage for your personal circumstances though may require a little more researching than in times gone by.
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