Everything You Need To Know About Mortgages

Buying a brand new home will probably be one of the largest purchases you will make in your lifetime so it is very important that you know everything in order to get the best deal. There is plenty you can do to improve your chances of getting your mortgage application accepted. Castles Estate Agents have created this blog to allow you to learn everything you need to know about mortgages and how to be accepted for one with ease. 

 

Find out where to get a mortgage, the different types and how everything works! If you would like more information on properties for sale in Swindon or about mortgages in general, please get in touch with Castles Estate Agents today on 01793 611 677.

 

 

What Is A Mortgage? 

A mortgage is a loan from a bank or building society that lets you buy a property. You then give the loan back plus interest over a period of about 25 years or more, although you can take them out over a longer or shorter term. The loan is secured against the value of your home until it is completely paid off. If you are unable to keep up with these payments the lender has the right to repossess your home and sell it, so they can repay the loan they lent you.

What Can I Afford? 

Do not stretch yourself if you think you will struggle to keep up with the repayments. It is also important that you think about the running costs of the new home too, such as household bills, council tax, insurance and maintenance. A lender will want to see proof of your income, certain expenditure and if you already have any outstanding debts. Lenders will also want proof that you will be able to keep up with repayments if interest rates rise and are even allowed to refuse to offer you a mortgage if they do not think you will be able to repay it. 

Tips For Increasing Your Chance Of Getting A Mortgage 

Credit Score 

If you have any concerns about your credit history, then it is a good idea to get a copy of your credit report and take it with you to your mortgage appointment. This will allow you to see what a potential lender will see when they review your application. If your credit score is low, there are a few simple things that you can do, for example, check you are on the electoral roll and close any credit cards that you no longer use. 

 

Your Budget

Mortgage lenders want to make sure that you are not borrowing too much. They look at how much your mortgage payments are relative to your income, ensuring you have the ability to pay. Run your own mortgage calculations to understand what you can afford. 

First Time Buyer

If you are a first-time homebuyer, you could qualify for a special mortgage and these can be extremely valuable. Make sure you educate yourself with these opportunities and the restrictions on these mortgages.

Proof Of Income

Mortgage lenders will want to see proof of how much you earn, so you will probably need a P60 form which you get every year from your employer and shows a summary of your pay and how much tax has been deducted. 

Buying With Someone Else 

If you are struggling to save up deposit on your own, you may want to consider buying a home with someone else. This could boost your chances of securing a decent mortgage, particularly if they’ve got an excellent credit history and a higher income than you. 

Where Can I Get A Mortgage?

You can apply for your mortgage directly from a bank or building society from their product range. You are also able to use a mortgage broker or an independent financial advisor. The mortgage market is a minefield, therefore taking whole of market advice from an advisor who can tell you about all lenders and products rather than going direct where they will only tell you about their own products is essential. Our advisors will talk you through the whole process and what is best for you, so don’t worry if you are unsure about what to do.

 

Types Of Mortgages 

Fixed-Rate Mortgage 

The interest rate you pay will stay the same throughout the entire length of the deal no matter what happens to the interest rate. 

Variable Rate Mortgage 

With variable-rate mortgages, the interest rate can change at any time. Make sure you have some savings set aside so that you are able to afford an increase in your payments if rates do rise. 

Discount Mortgage 

This is a discount off the lender’s standard variable rate (SVR) and applies for a certain length of time. 

Tracker Mortgage

Tracker mortgages move directly in line with another interest rate. Normally the Bank of England’s base rate plus a few percent. 

Capped Rate Mortgage 

Your rate moves in line normally with the lender’s SVR but the cap means the rate can’t rise above a certain level. 

Offset Mortgage 

These work by linking your savings and current account to your mortgage so that you only pay interest on the difference. You still repay your mortgage every month as usual, but your savings act as an overpayment which helps to clear your mortgage early. 

Tailored Mortgage Quotes 

 

 

If you still feel like you need more advice on mortgages, look no further. Castles Estate Agents can offer you a mortgage quote or independent mortgage advice. All of our advice for each client is individual and will be tailored to your needs and your situation. We work alongside the Mortgage Advice Bureau to help provide you with independent mortgage advice in Swindon and other surrounding areas. If you would like more information on any of these services please give us a call today on 01793 611677.