Buying a home is one of the most significant financial decisions you'll make in your lifetime. While shortlisting and viewing different properties can be exciting, you need to start by getting mortgage approval. The complex world of mortgages can be daunting, and there are several pitfalls that people fall into which can hinder the process. Here are the most common that we come across:
1. Your credit history
Your credit history plays an important role in determining whether you will be successful with your mortgage application. This is a relatively simple one to address by reviewing your finances and making sure you are in the black. Simple things like paying your loans, credit cards and bills on time, reducing outstanding debts, and avoiding opening new lines of credit will greatly improve your credit history.
2. Your mortgage choices
Mortgage rates and terms can vary from one lender to another. This is where an experienced mortgage broker can help you by working with you to evaluate your financial situation, assess if there are any supports you can apply for e.g., Help to Buy and First Home Schemes and recommend the best mortgage option for you. They will obtain quotes from multiple lenders, and compare interest rates, closing costs, and loan terms.
3. Your total costs
You have your deposit, and you know how much you can borrow. But when budgeting for your new home, you need to consider all the associated costs now and into the future. Solicitors’ costs, property taxes, homeowners' insurance, and maintenance expenses should all be factored into your budget. Ignoring these costs can put a big strain on your finances and lead to financial stress down the road.
4. Your repayment ability
Lenders often use a debt-to-income ratio to assess your ability to manage mortgage payments. Taking on additional debts, such as car loans or new credit card balances, can negatively impact this ratio and jeopardize your mortgage approval. Avoid major financial decisions, like buying a new car, before securing your mortgage. You should be able to demonstrate your proven repayment ability (PRA) by for example your payment of rent or regular consistent savings.
5. Your mortgage protection
When completing a mortgage, you will be required to have a mortgage protection policy in place before the mortgage can close. Depending on your current health and medical history, you may need to get a medical or provide access to past records, which can all take time to process. By starting this process early, you can avoid any delays that may impact your mortgage drawdown.
When you’re buying a home, whether it’s your first home or you’re trading up or down, securing a mortgage requires careful planning and attention to detail. By avoiding the most common pitfalls, you can ensure your move is less stressful. That’s where we’re here to help. We will take the time to explain the whole mortgage process to you and guide you through one of the most important journeys of your life. So, get in touch today to start your journey!
Comments