5 THINGS TO CONSIDER BEFORE TAKING OUT A MORTGAGE
For most of us it’s the biggest financial decision of our lives, but all too often we’re so swept up in the excitement of buying a home that we don’t pay attention to the detail of what we are doing. Property buying is an unfamiliar activity for most of us and we are far too ready to put our trust in the hands of helpful experts. It’s not that these people are dishonest, it’s simply that they have a vested interest in selling a particular product and if there’s one certainty about life in the twenty-first century it’s that it pays to shop around. So, don’t rush into a mortgage simply because you’re delighted to have been offered anything at all. Do your research and make sure that you secure absolutely the best deal that you can get, after all, this is a commitment that you’re probably going to have to live with for quite some time.
- Check your credit score
Any lender will look at three things when making a financial assessment. Do you have a steady income? What is the size of your deposit? Do you have a solid credit history? Your credit report tells the whole story: the debt levels of your credit cards and loans; how you pay your bills; where you live and work; if you’ve filed for bankruptcy; whether you’ve had a home foreclosed or a vehicle repossessed. Factors which will particularly impact on your mortgage, the rate you’ll be offered or whether you’ll even be able to get one at all, are, your late payment record and your level of debt. Any credit cards at more than 30% of their credit limit will have a negative impact on your mortgage application. You can check your credit score by visiting experian. Make sure that the information held on you is correct and take steps to make your credit report is as positive as possible.
- Do you really need a thirty-year fixed term mortgage?
A thirty-year loan will cost you roughly twice as much as a fifteen-year loan for the same sum. A fifteen-year mortgage is a less risky investment for the bank and therefore you are likely to get a better rate of interest. It will of course mean higher mortgage payments, but remember, if you have a thirty-year mortgage that you want to get out of early, you are likely to incur a punitive penalty charge.
- Compare the cost of mortgage life insurance
Don’t just accept the mortgage protection insurance offered by your lender, if you do you could end up paying far too much. Use a comparison website like compare the market or a life insurance broker like Reassured and you could save yourself a lot of money.
- Think carefully about the interest rate you’re going to pay
Variable rate mortgages often offer enticing low initial rates, but they are a gamble and you might find yourself paying a lot more, further down the line. With a fixed rate mortgage, you may, or may not, pay a little more, but you will have peace of mind.
- The bigger your deposit, the better the interest rate you can secure
Rather than holding onto cash for home improvements you’ll save money by putting as much as you can toward your deposit. Use a mortgage calculator and see how much you’ll save.