For most people, your mortgage is your largest financial commitment, therefore finding the right mortgage for your new purchase should be top of your list.
With the uncertainty of interest rates, it is a good idea to bag yourself a favourable deal, however with a minefield of products to contend with including fixed, trackers, offset and discounted, it can be confusing and all-consuming especially if you are a first-time buyer.
Our guide will help to advise you through your new purchase whether you are a first-time buyer or moving home, we can help you Everystep of the way.How much can I borrow?
Different lenders all lend different amounts which doesn’t make it easy. Lenders have different views and leniency towards additional income such as benefits, overtime, commission and bonuses which can make it feel impossible to find the right lender without the aid of a mortgage adviser.
Additionally, lenders don’t just look at your earned income they also look at what you can afford. This means additional liabilities aside from the mortgage can impede the overall maximum borrowing, essentially the higher your debts, the lower you can borrow on a mortgage. Other household costs such as utility bills, travelling and dependants can influence your affordability.
Cutting out unnecessary spending in the run up to applying for a new mortgage is a wise idea and avoid taking out any new liabilities as this can have a negative impact on your ability to obtain a mortgage.
Proving affordability to your proposed lender can be a difficult task. A mortgage adviser can help present to your lender a clear picture of your personal and financial circumstances. They have access to specific information and have a good knowledge of lenders’ criteria and what documentation and information they require. A good adviser can increase your chances of acceptance by matching you to the best deal available based on your circumstances, credit history and their knowledge of the industry.How much deposit do I need?
The golden rule is quite simple, the bigger the deposit, the better the interest rate, the lower the monthly payments the cheaper the mortgage. Mortgage rates are the highest at 5% available deposit and the best rates are obtainable at 40% available deposit.
Gone are the days of 100% mortgages but lenders do allow deposits as low as 5% and the help to buy government incentivised scheme may also be worth reviewing depending on your circumstances. Please see our help to buy blog for further information regarding this.Boost your chances of getting a mortgage
Having a big enough deposit forms only part of the process, affordability and credit scoring play as much a part in the lenders assessment of whether they are willing to give you a mortgage. The following will aid your mortgage eligibility:
- Ensure you are on the electoral roll
- Check your credit file for any discrepancies
- Check the address on your credit file is current
- Break with past relationships – write to lenders to disassociate yourself with ex partners etc.
- Do not miss or make late payments
- Keep applications to a minimum before applying to remortgage
- Avoid withdrawing cash on a credit card
- Avoid payday loans at all costs
- Pay off your credit cards in full each month
- Close any unused credit cards
- Stay out of your overdraft
What type of mortgage should I choose?
It’s not always entirely about saving money, ensuring that you have a product that is right for your circumstances is imperative.
Maybe you’ve had a pay rise or a change of job and would like to pay more of your mortgage off and would like the shortest term possible?
Maybe you are concerned about interest rate changes and require your mortgage payments to be stabilised for a long period?
Do you have a mortgage already and is this portable or will you incur penalties for leaving?
Maybe you only plan to stay in the property for a year and would prefer a product where you do not get charged to leave?
Maybe you require the lowest payments possible?
Perhaps you do not require stability of payment at all?
Do you have savings in place and would like to offset these against your mortgage?
There is no one size fits all and a good mortgage adviser can help you find the right product for you and explain all the different options available.Repayment or Interest only?
Unless you have a compelling reason and a sufficient repayment vehicle in place, a repayment mortgage is the way forward and the only way you are going to pay the loan off. The monthly mortgage payments are calculated to both service the interest and pay off the capital of your home over the mortgage term.
Interest only mortgages only service the interest of a mortgage loan and lenders often have very strict criteria regarding this and some lenders have pulled their interest only residential products completely. Applicants generally are required to have a significant amount of equity in the property (enough to downsize in later life) and higher incomes.What paperwork will I need to apply?
All lenders will need the following as a minimum:
- Proof of income – Often your last 1-3 month’s payslips or 2-3 years accounts/SA302’s if you’re self-employed, including proof of bonuses or commission and pay rises.
- Latest 1-3 months bank statements.
- Proof of address – Usually in the form of a utility or council tax bill dated within the last 3 months.
- A valid proof of identity such as a passport or diving licence.
What type of mortgage do I need?
With so many options out there, it is best to liaise with a whole of market mortgage adviser who can help you chose which type of mortgage fits your needs. They can give you impartial advice based on an initial assessment of your financial circumstances and what offers are available.Benefits of letting an adviser help you find the right mortgage?
Good Mortgage advisers will be qualified and experienced. There is so much information out there to process and using someone highly skilled in this area can be hugely beneficial, it takes the strain out of searching through endless options on the internet, being baffled by the jargon and the sheer number of banks and building societies offering mortgages.
Some brokers charge little or no fee’s (depending on the services offered and your individual circumstances) and choose to get paid by the lender for bringing in the business, saving you even more money.
A good adviser should be able to quickly source a relevant product that fits your needs and budget. They can talk to lenders on your behalf, presenting your application in the best possible light and increase your chances of acceptance. In addition, some lenders will only work with brokers offering intermediary exclusive products, which you would not otherwise have access to if you were to go direct.
Whole of market advisers offer exactly what they say on tin, they can research the market quickly and thoroughly saving you from trawling through every lender one by one leaving behind a trail of failed applications and footprints on your credit score. They have access to the whole of the market (as opposed to one bank or a select few) and the resources to speak to the lender’s underwriters quickly, aiding the speed of applications and allowing them to resolve problems quickly as opposed to waiting days for a call back or an in-branch appointment with a bank.Regulated by the Financial Conduct Authority (FCA), they are unbiased and a good adviser will usually come by recommendation giving you further peace of mind.
Everystep Financial are fully qualified, whole of market mortgage brokers, with a wealth of knowledge and experience in all types of remortgaging. We are available to visit you at a time convenient to you, in the comfort of your own home. We have offices in Weston-super-Mare and Hanham in Bristol and telephone appointments are also available if you prefer.
Call us to book a free no obligation initial review and let us take the stress out of remortgaging!