When you are buying a property, you obviously need to make sure that you get the best possible home loan you can. With a good home loan, you are going to be able to afford the home in question, but you will also be in a strong financial position as you pay off the mortgage itself. It is definitely worth shopping around and doing your research before you take out a mortgage - but, as it turns out, that is not the only thing you should do.
In this article, we are going to look at some of the important steps you should take before you take out a mortgage. As long as you have considered all of the following points carefully, you will be much more likely to end up with a good mortgage, and in good financial standing.
Find Your Perfect Home
Okay, so if we are being realistic, it is not always going to be possible to find your absolute dream home. But nonetheless, you should pull out all the stops to make sure that you get hold of a property which is as close to perfection as possible. By finding your perfect home, you are going to feel a lot better about taking out a loan, as it means that you are much more likely to see the benefit of doing it - because you are happy with the end result.
Essentially, that just means: spend as much time as you need to, personal circumstances accounted for, to ensure that you find the right home for you. When you put down that deposit and secure that home loan, you want to know that it is in service to a home you will love.
Learn About The Basics Of Mortgages
It’s amazing how often people go into this process without really knowing all that much about mortgages in the first place. There is no shame in not knowing, but you are going to put yourself in better stead if you first learn as much as you can about the basics of getting mortgages, and what that entails.
To help you out, here are a few of the essential terms that you will need to be aware of:
Interest. This is the amount that is added to the loan’s value, usually figured out pro rata and then applied monthly.
Rate Types. You have fixed rate loans, where the interest rate is not going to change but might well be higher - and variable, with a rate that is probably lower, but which might rise slightly over time.
Types of Mortgage. Depending on the type of property you are buying - to-let, to live in, commercial premises and so on, there will be a different type of mortgage too.
Fees. You should also be aware that there are generally late fees and fees for other kinds of situations - including, sometimes, a fee for overpaying too early!
Once you are clued up on the basics of a mortgage, you are going to be in a much better position to start looking for yours.
Get Your Finances In Good Order
Before you even think about taking out a property loan, you should ensure that your finances are in a very strong working order. What does this mean? Mostly, it means that you should not have any other outstanding debts, and that you have a decent handle on your monthly outgoings as they currently stand (but bear in mind that if you currently pay rent, that will soon be replaced by mortgage repayments).
Ideally, you will have the minimum deposit ready to go and sitting in a savings account, but you should also have a few thousand left over. You need to work out what your emergency fund should be (around three or four months’ worth of outgoings in a secure place) as well as some extra money for any immediate repairs you might need to make on your new home.
You should also have a decent job and regular income, as this is something that your mortgage provider is going to want to see evidence of when you apply. As long as all that is true, you are going to be in a good position to secure a mortgage.
Use A Mortgage Calculator
It’s best to know exactly and specifically what you are getting into, so using an online mortgage calculator is going to be an important step before you sign up to your loan itself. Good calculators can tell you your total debt servicing ratio as well as your likely repayment schema, so that is clearly important information to have on hand as you seek out mortgages. Every mortgage you come across, put the figures into the calculator and see where you are going to stand. This will help you to see what your future looks like in financial terms.
Figure Out If You Need Help
Many people find that they need some kind of help when they are looking at mortgages. At the very least, it can be wise to hire a financial advisor, as they will be able to inform you of whether you are making the right moves or not. You might also want to look into whether a mortgage broker is necessary for you, as they can often find mortgage deals which are better than the ones you can get a hold of as an individual. Paying them a small fee could mean you save more money over the long term, so it’s best to think of this as an investment rather than a cost.
Consult Your Partner
Finally, a word on accountability. It should go without saying, but if you have a life partner whom you share everything with, you should not do any of this without them by your side. You need to approach this as a real partnership, and work together on every aspect of the process of getting a mortgage. That way, you are both going to know exactly what is going on, and you will be able to make the most of it together.
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