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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

If the last few months have told us anything it’s that Mortgages are very important part of any economy. We are constantly reading in the newspapers and seeing on the news the various conflicting predictions and government targets of where the mortgage and property market is heading that it makes it very easy for the average human being staring in estate agents windows to withdraw from the market completely.

If you are considering dipping your toe into the mortgage market, then make sure you do your research as it is the biggest financial commitment you are ever likely to make. Listen to expert opinion and weigh it up against your own situation. Once you have found that perfect property, here are some things to consider when applying for a mortgage.

Things to consider when searching for a mortgage:

1. Credit Score – all banks and building societies will review you credit file to ascertain if you are an adequate risk. Most Credit applications such as Equifax and Experian will score you depending on how well your financial accounts are managed. Contrary to what you might think, having no credit on your file is not normally a good thing because the lender doesn’t know what kind of risk you are, that’s not to say you should rush out and take out as much credit as possible, its more than likely that lenders will just ask for different information is find out what kind of risk you are.
2. Affordability – historically, lenders use to base their mortgage lending on income multiples and some still do but now they are more likely, in the name of responsible lending, assess an applicant affordability by looking at a applicants incomings and outgoings. From there they will assess how much of a loan is affordable based on your disposable income.
3. Charges – there are a variety of charges connected with a mortgage including; Higher Lending Charge, application fees, Product/arrangement fee and maintenance fees to name a few. Most of these can be added to the loan amount without affecting your loan to value but bear in mind that interest will be charged on the total loan amount including the fees.
4. Valuation reports – cost of a valuation report is dependent on what type of valuation report you request and the market value of your property i.e. a basic valuation report would cost in a region of £240+ while a full valuation report with a building inspection would be in the region of £455 +. If this is carried out by the lender then they will often charge this fee up front because a mortgage application can be declined on the strength of a valuation report so lenders will want to make sure they are not out of pocket.

When searching for a mortgage:

• Always seek independent financial advice from a CMAP qualified mortgage intermediary – a mortgage is a big commitment and there are many different types of mortgage product out there on the market so always get advice from an expert. An additional benefit is that some mortgage brokers can obtain exclusive deals from some lenders which are not available to the wider market. However bear in mind that mortgage brokers are paid commission on the sale and a procuration fee from the lender if your mortgage goes through.
• Compare Mortgages Online – it’s a simple and easy thing to do. The internet holds a wealth of information and most comparison websites will show a wide range of mortgage products varying from fixed mortgages, buy to let, self build, and offset mortgages.
• Make sure when you submit your information that it is spelt correctly and there are no mistakes – after any spelling mistakes or changes the lender will automatically search your credit file again and each time will leave a footprint and if you have a lot of footprints on your file it can make your application fail even if you are a good risk.
• Make sure you read all paperwork and that you understand everything you are agreeing to – you mortgage is the largest financial obligation you will ever take on so make sure your happy with it because once it exchanges you are legally obligated to the vendor.
• Make use of online mortgage calculators - these will give you an accurate idea of what you can afford and will also give you an insight as to what your monthly payment could be allowing you to budget adequately. Making sure you can afford the monthly commitment is important because, as it is reiterated on every mortgage document you will receive, your home is at risk if you do not keep up with repayments on your mortgage or any other debt secured on it.

If you want more information, see Moneyextra.com’s Guide to Mortgages.