You want the best interest rates when applying for a mortgage, of course you do. I have yet to meet a client who tells me they want to pay the highest possible interest rate. Although rate is important, it is also imperative that fees are taken into account as well. In recent years lenders fees have increased dramatically. You may also have noticed that valuation fees between lenders will differ, often by hundreds of pounds for the same property.
You can help yourself in many ways to achieve the best deal by following some simple rules:
Check your credit record
When you apply for any form of credit including a mortgage the lender will check out
your credit file. Occasionally these will contain errors for all kinds of reasons. I will save you any of the issues I have come across in the last 28 years, needless to say they would surprise and shock you. It is worth having any errors you discover corrected to improve your chances should you find any.
If you do apply for a mortgage and are refused, this also shows on your credit record, possibly making it more difficult for any other lender to accept you.
You can obtain your credit report from the following rating agencies, Equifax, Experian or Call Credit. Your file is available by post for £2 or if you wish to see it immediatly you can register online. Any errors you may find needs to be taken up with the institution concerned. Credit agencies only report on what they have been told.
If you are not already on the electoral roll, register without delay. Lenders want to know that you are of a stable nature and not flitting from one residence to another. Lenders will ask to see evidence of your last 3 years addresses. The electoral roll will show where you have been residing.
Any loans you have in place will effect the amount you can borrow. If you are able to, pay off any loans that you can, including credit cards. Lenders will annualise any monthly payments you are commited to and subtract this from your annual salary before calculating the amount of mortgage you can have. e.g if you have a car loan of £250 per month, multiply this by 12 equates to £3000 pa. Lenders will subtract £3000 from your salary before calculating your lending capacity. Lenders will calculate up to 5% of any credit card balance before applying any income mutiplier.
The more money you can place as a deposit the better the interest rate you will be able to obtain. DO NOT apply for a loan to pay for the deposit. Many first time buyers will be able to use Bank of Mum & Dad for the deposit. If your parents are not able to help you with cash, many lenders accept parents as guarantors Some lenders accept cash that
is returned to the helper at a later stage, offering the helper some security that their cash is safe.
Some lenders are offering a 95% loan (5% deposit ) of the purchase price (LTV) however if you are disciplined and able to save a 10% or even 15% for the deposit, the interest rate you will be charged will be significantly lower. Therefore borrowing a lower amount at a lower interest rate.
We are enjoying the lowest rates of interest their has been in living memory. THIS WILL NOT LAST. So consider carefully the implications to you when interest rates do begin to rise. Nobody can tell you when this will happen, BUT THEY WILL RISE, and if interest rates should double, fairly easy to do when rates are as low as they are now. This will affect your monthly payments at some stage.
Your home may be repossessed if you do not keep up repayments on your mortgage
For more information or you wish to discuss further please contact on:
Telephone number: 01708 640855
Authorised and regulated by the Financial Conduct Authority