A Step-by-Step Guide
Buying your first home is such an exciting step to take, but securing a mortgage can feel pretty overwhelming. With so many lenders and mortgage types, not to mention financial considerations that you need to make, it’s vital to be as prepared as you can be. So, let’s walk through the mortgage application process step by step and look at why working with a mortgage advisor can be a game-changer for first-time buyers.
Assess Your Financial Situation
Before you apply for a mortgage, you should get a sense of your financial health. What do we mean by this? Well, you will want to look at things like income, expenses, savings, credit score, and existing debts. Lenders will decide to approve your application based on those, so it’s important to know your current situation.
Be sure to check your credit score and improve it if necessary – you can do this by reducing outstanding debts and avoiding taking on new credit. It’s also a good idea to check for any errors in your report and have them amended. You should look at your savings too – most lenders are looking at least 5-10% of the property’s value for a standard deposit. If you are able to put down more, this will really help.
Understand Different Mortgage Types
Mortgages come in a few different types, and understanding all of your options helps you choose the best one for your circumstances. To help you out, here’s a brief summary of the three main types of mortgages:
- Fixed rate: The interest rates remain the same for a fixed period, so you know what you will pay every month.
- Variable rate: The interest rates will fluctuate based on the lender’s standard variable rate (SVR). This can increase or decrease your repayments.
- Tracker: The interest rates for these mortgages follow the Bank of England’s base rate, meaning your payments can change over time.
Get a Mortgage Agreement in Principle
An Agreement in Principle is when you get conditional approval from a lender. This will give you an estimate of how much you can borrow. Having an AIP really strengthens your position when making an offer on a property.
The Importance of Working with a Mortgage Broker
You might have heard of a mortgage broker, but what do they actually do? They are there to act as an intermediary between you and the lender, and they will make your mortgage application process smoother and increase your chances of securing the best deal. Here’s why you should consider working with one:
Access to a Wide Range of Lenders
Unlike banks that only offer their own mortgage products, brokers have access to a huge range of landers, including those who specialise in mortgages for those in more complex financial situations such as having bad credit or being self-employed.
Higher Chance of Approval
Mortgage brokers understand lender requirements and can match you with the ones most likely to approve your application. They will also ensure your application is complete and meets all requirements, reducing the chances of rejection.
You’re Ready
Once you have done all of the above, it’s time for your application to be submitted. Getting your first mortgage can be a complicated process, but a broker is there to help! Why not get in touch with one today?
