Top 10 Mortgage Mistakes to Avoid
There are certain important factors that go in to financing a mortgage. If you proceed blindly and without proper research, chances are you might make some mistakes that may haunt you in the future. To help you we have come up with the top 10 mortgage mistakes to avoid.
10. Mortgage deposits
For taking out a mortgage you will need to put down a deposit. The minimum amount for your deposit is around 5% to be eligible for a mortgage. The more you pay for the deposit, the more competitive your mortgage rate will be.
For example, you want to buy a house which is worth around £500,000. So, 5% of £500,000 is £25,000. Now, if you pay the deposit, the mortgage will be on the rest of the sum you owe.
So, the more you pay in the form of a deposit, the less you will have to pay for the mortgage. We suggest you save up more than the minimum deposit so you get a more competitive mortgage rate.
9. Mortgage applications
You need to consider the eligibility of your mortgage application. Each mortgage has requirements. It is important to check out those requirements before you apply.
For example, you applied for a mortgage that takes applications from people under 45 years old, but you are 48. This would get your mortgage application rejected.
Other factors also affect you getting accepted for your mortgage. It is important to make sure your mortgage application gets accepted because a declined mortgage application harms your credit score.
The fees involved for you to apply for a mortgage, even if it gets declined you will not be refunded. So, be more cautious when applying for a mortgage.
8. Credit scores
Your credit score is more important than you might think. For any kind of loan application, the first thing lenders want to look at is your credit score. If you have a good credit score it means you are a good borrower, who repays their loans on time.
So, the higher your credit score is the better chances you have of getting a more competitive rate. Avoid this crucial mortgage mistake and check your credit score online before applying for a mortgage.
7. Be honest
You need to be honest in your mortgage application. The lenders will check all the facts about you and make sure everything you say checks out. For example, if you lie about your earnings in your mortgage application, the lender is going to check it and see you lied about your salary.
This will give the lender the wrong impression about you. Chances are they may even reject the mortgage application.
These are some of the things you should be honest about in your mortgage application:
- The amount of deposit you are willing pay.
- Your income.
- Your source of income.
- Are you planning to rent the property out or will live in the house yourself?
6. Avoid applying for too many mortgages
One of the most common mortgage mistakes is applying to a lot of mortgages. Borrowers tend to think the more they apply to, the chances of them getting accepted increases.
This is actually incorrect. Because each time you apply to a mortgage, it is recorded in your credit report. So, make sure you are applying to the mortgage where the chances of you getting accepted are higher.
Lenders want stability. If you are thinking about quitting your current job, then do not apply for a mortgage. This is one of the most common mortgage mistakes people make.
It does not matter how high the chances of you getting another job are, make sure you are stable in your earnings when applying for a mortgage.
4. Do your research
Another mortgage mistake people make is saying yes to the first mortgage offer they get.
Do not rush this decision, as you want time for yourself to process and make sure you have the right deal for you. Do your research, check out other mortgages, and see what is best for you.
3. Avoid being too loyal to your bank
One of the most common mortgage mistakes people make is only speaking to their bank. It is easier for you to get through the process of the mortgage because you know everyone and trust them.
But it does not mean you will get the best deal from them. Check out other mortgage deals, see which is the best for you.
2. Fixed-rate mortgages
This cannot be termed as one of the mortgage mistakes because some people may like to go with a variable interest rate. This may increase according to the current market.
These mortgage rates generally involve a risk but will be lower than the fixed-rate mortgage rate. It all comes down to whether you are willing to take the risk or not.
1. Mortgage fees
Earlier we talked about the mortgage application fees but not the mortgage fees. Avoid mortgage mistakes like not checking the mortgage fees you will be charged.
The more competitive the mortgage is, the higher the fees are. So, take in to account the mortgage fees when choosing your mortgage.
We hope avoiding these mortgage mistakes will help you get better mortgage deals and if you have some more tips, do not forget to share them with us in the comment section below.
How does a mortgage work?
A mortgage happens when a lender gives you money to purchase a home and you pay the loan back slowly with interest.
The loan very secure as the value of the loan is secured against the home that it is helping pay for.
What is a mortgage broker?
Mortgage brokers are here to help you find the best mortgage deal on the market for your situation. We match you to a lender who is willing to give you a mortgage and you don’t have to go searching for the right lender.
What types of mortgages are there?
There are two main types of mortgages, fixed and variable rate. A fixed-rate mortgage charges the buyer the same amount of interest over the whole mortgage period, so all of the payments are the same.
A variable rate mortgage involves interest rates that can change, so your payments may be different each time.
Can I get a mortgage with bad credit?
Bad credit will not prevent you from getting a mortgage. We work with certified lenders who cater to a diverse range of clients and will find one to fit your situation.