A mortgage is perhaps the biggest financial commitment you’ll ever make, so it’s important to do your homework before applying. Here are five things to keep in mind before you get one:
Find out your credit score
Whether you are looking to apply for a credit card or seeking a mortgage, your credit rating will be the first thing lenders consider. It can make the difference between acceptance and rejection, so if your score isn’t currently what it should be you may need to take steps to improve it. It’s always worth having a look through your record to check the information within it is correct, because mistakes can be made! If there’s anything you think isn’t right then challenge it as a better credit rating is likely to see you offered a better rate of interest of interest on borrowing, which could save you thousands in the long term.
Existing debts and credit
If you’re currently in debt then it’s best to tackle this first, before taking on additional commitments. This can make your life easier and reduce the risk of you encountering repayment issues.
How much you can afford
Budgeting is essential for those looking to stay on top of their finances and especially so when it comes to having a mortgage. Before you apply consider your salary and what you could realistically afford to pay each month. Don’t forget to take in to account factors such as insurance, council tax and household bills, as well as leaving yourself enough spare to live comfortably and deal with emergencies.
Shop around for deals
With so many lenders and different kinds of mortgages out there it’s essential you shop around to find the right deal, just as you would with the lesser commitment of making a credit card application. Think about whether you’d be better off with a tracker or fixed-rate mortgage and also consider any associated fees. It’s also worth speaking to an expert if you’re unsure about your options or want a little more detail.
Save an adequate deposit
In the current economic climate, deposits have risen to higher levels than ever before. Buyers will typically need to put down between ten and 25 per cent of the total value of the property. Naturally, you should look to save as much as possible as this can open up your options and make you eligible for better deals.