It’s estimated that there are more than 6,000 different mortgage products out there, and finding the right one for you can be a daunting task, especially as a first time buyer, but it’s important to take the time to make sure that you get it right, as it could end up saving you hundreds of pounds a month, which will certainly add up over the years.
Decide which type of mortgage best suits you
There are multiple different types of mortgage out there and before you can pick which lender to go with, you need to know what kind of mortgage you’re after.
First things first, do you want a fixed or variable rate mortgage? A fixed rate mortgage will mean that your monthly repayments will stay the same every month. This is great as you’ll know that payments aren’t going to jump up.
On the other hand, a variable rate mortgage will reflect the base rate set by the Bank of England which is currently 0.5%.
While variable rate mortgages have traditionally been cheaper, we’re starting to see a shift, and of course, you never know how their rate will fluctuate over the years.
Pay as much towards your deposit as possible
While this may well be easier said than done, it pays in the long run to put as much down as possible as a deposit.
A larger deposit means less risk for the lender, which will usually mean lower monthly payments.
It’s worth bearing in mind that your mortgage rate will drop according to your loan-to-value band, so if you have a 9.75% deposit/equity band, if you can just bump this up to 10% you’ll likely get a much lower rate.
If nothing else, a large deposit shows your lender that you can afford your repayments and may deflect from other issues on your credit report.
Make sure you budget sensibly
Whichever type of mortgage you choose to go for, you need to be realistic about what you’re going to be able to afford.
This will depend largely on what kind of property you’re looking for and how much you’re willing to put down as a deposit.
However, with so many lenders out there, the deals that you’re going to get offered are going to be very varied.
Try out our handy mortgage calculator to give yourself a better idea of what you will and won’t be able to afford, and try to be on the conservative side as stretching your budget will only come back to bite you long-term.
While the mortgage rate is obviously very important, you’ll also need to bear in mind the range of fees and costs that come with one.
These include but aren’t limited to stamp duty, solicitor’s fees, survey costs and mortgage fees.
All added together, these costs could wind up setting you back a couple of thousands of pounds alone.
One cost you won’t have to worry about with Search Mortgage Solutions is a broker fee as we offer a ‘no broker fee’ promise.
Going direct to your current bank will seriously limit the amount of mortgage available to you and we recommend using a mortgage broker such as ourselves.
We will scour the entire market to try and find you the best deal, covering as many lenders as possible.
We can also offer you expert advice on things such as the Help to Buy scheme and options such as shared ownership to make your decision easier, which is especially useful if you’re a first-time buyer.
We know the mortgage market inside out and have excellent relationships with lenders, so you can trust us to know which deal and lender will be right for you.
We’re also not tied to any particular lenders like some brokers, so we can search the entire market.
If you do wish to get in touch, either give us a call for free on 0800 756 7794 or get in touch online.
Get your application organised
You need to treat your mortgage application like you would a job application and take lots of time and care over it.
You should get a free credit score check from a site such as ClearScore and seek out ways in which you can improve it.
We posted a blog last year about ways in which you can improve your score and some are as simple as just getting yourself on the electoral roll or closing old accounts.
Arrange a mortgage before looking for a property
As we said earlier, stretching your budget that little bit extra to get a dream property could be disastrous, so it’s important to try and establish what you can afford before you go house hunting.
Knowing what your mortgage will and won’t allow you will stop you from wasting time looking at homes which you simply can’t afford.
There are a couple of other things that lenders may try and sell you, some of which will be more useful than others.
For example, there’s PPI which usually sets alarm bells ringing. PPI is actually useful for covering your mortgage payments in instances such as if you were to fall ill, but usually only covers your interest and can be quite expensive for what it is.
You will also often be offered buildings, contents or life insurance from your lender and while these are all obviously important things to have, bear in mind that you don’t necessarily need to buy them bundled with your mortgage and it’s ok to shop around for them as you can probably get them cheaper elsewhere.