Applying for Your First Mortgage
Applying for your first mortgage is a big step and can be crushing if you don’t get accepted. There’s no way to completely guarantee that you will get through those checks and get your foot on the property ladder but there are ways to prepare to help. There are also some things to understand about the world of mortgages that might make the whole process seem less stressful.
Before you even think about approaching a mortgage company to go through the application process, you need to check your finances and take a look at your current financial position. There are plenty of free credit check services to help you get an idea of your credit score and also lots of resources to help you understand what this means – you could start with this useful credit score information from MyCreditMonitor. While credit scores aren’t the only factor in getting a mortgage, if you have a bad one this is liable to stop the process regardless of other issues.
Most mortgage companies now look at what you can afford to pay and still live and pay other essential bills rather than any outdated system of ‘x times one wage and x times another’. This means you need to prepare information such as incomings, outgoings, what you spend on food, other financial commitments and even ideas about what you spend on non-essentials such as gym memberships or eating out. That way you have any information they could ask for.
Everyone knows that you need a deposit to get a mortgage and the more the better, but often people don’t realise about another cost of buying a house – stamp duty. Stamp duty is paid depending on the purchase price of the property, ranging from 0% for properties up to £125,000 to as much as 12% on properties over £1.5 million.
Getting the right deal
When applying for a mortgage, you should always look at the full package and the deal on offer. There are hundreds of mortgage companies, all offering different APRs, payments and even extra benefits so you want to get the one that will suit you best. There’s no obligation to take a mortgage once you are given a quote so don’t be afraid to shop around. The most common types of mortgages include:
- Tracker – where the movement of the base rate effect how much you pay on your monthly payment
- Standard variable – these follow the base rate but also can change if the lender decides to change the rate
- Fixed – this is where you pay a fixed rate for a set period of time and the changes in the base rate don’t affect your repayment. Typically, after the set period you go onto one of the other types of mortgage
How long does it take?
The application process can take two or three hours now depending on the lender due to the amount of information they now collect before making a decision. Once you have provided this information, it can take around two to four weeks to receive an offer. Once you have an offer, you can then set about the process of purchasing your first home.