5 things to know before applying for a mortgage
Mortgage rates look set to stay low for the year, meaning now is a great time to buy. Here are 5 things to know before you make your mortgage application:
1. Make sure you get advice
Take advice from a financial adviser, mortgage broker or even the bank or building society you are applying to direct. If you are applying for a mortgage online or by post, you will still need to demonstrate you understand the process and the mortgage deal.
2. It takes time!
Getting a mortgage isn't a quick process. Mortgages are sold on an ‘advised’ basis, which involves a face-to-face or telephone interview and can take two or more hours. You will then need to wait for a mortgage in principle and a lenders valuation of your property.
3. Your finances will be scrutinised
Lenders require a detailed assessment of whether your mortgage is affordable both now and in the future. This means that ALL of your monthly expenses, not just household bills, will be gone through with a fine-toothed comb.
4. The amount you can borrow could be capped
As lenders are required to ask more probing questions about what you spend each month, the cash left over to fund your monthly mortgage repayments may be less than you'd hoped. The impact of this could simply mean you are offered a lower sum of cash.
5. Interest-only mortgages are niche
Interest-only mortgages, whilst still available, are very rare. You will be required to show proof of a full plan of how you will repay the capital when the loan matures and be called on at least once during the interest-only period to give an update of how this is going.
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