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Mortgage guide

Buying a home can be one of the most exciting times of a person’s life – but it can equally be the most stressful. Understanding how to get a mortgage, and where to get it from, can be tricky, but the good news is that there is no need to worry. This short guide will tell you everything that you need to know to take those first steps, meaning that if you’re looking to buy a home in the area of Perth, your dreams could be realised sooner than you might think.

Initial Considerations

Finding out how much you want to borrow is important, and lenders will always want to know this right from the start. Learning about the property in the area in which you want to buy your home is key, and lenders are much more comfortable granting mortgages to those who have obviously done their research.

You will not be able to borrow more than you can afford to pay back. Things such as your salary will be taken into account, in addition to certain circumstances that might arise in the future, including your job or life situation. The repayment price that you are quoted may not always stand, as rates can rise or fall depending on interest rates.

The amount of deposit that you are able to put down will strongly affect the rate that you are given. The more you are able to give as a deposit, the more reasonable your rate of interest will be. There will also be other costs included in buying your home, for example legal fees, meaning that you may not be able to put down all of your savings as your deposit.

Getting a mortgage

Since April 2014, anybody offering mortgages must be registered with the FCA. This means that anybody who is giving advice on mortgages must have undergone a certain level of training, and the aim of this was to reduce the chances of people falling behind with their repayments after being allowed to borrow more than they could really afford.

Generally, there are two main choices when it comes to selecting a mortgage. A repayment mortgage or an interest only mortgage. A repayment mortgage will include your interest rate and repayment of your loan in your monthly repayments, so at the end of the mortgage term the debt is settled. An interest only mortgage will just repay your interest, meaning that another investment plan is necessary to cover the actual loan itself.

There are a number of people who could help and advise you whilst getting your mortgage, including:

– Mortgage brokers

– Solicitors

– An estate agent

– An independent financial advisor

Covering the gap

When you’re buying a home, there is a chance that the costs involved may be difficult when a home is being sold at the same time as a new one is being bought. For this, there are bridging loans, which are short term loans taken out until the sale of the house, and all associated funds, have gone through.

What if you’re rejected?

Sometimes, mortgage applications are rejected, and it is important to know why. Occasionally, your credit score or employment status can be the reason for this, or there may be an issue with the property that you’re buying or selling. All lenders have different criteria when approving loans, so even if you are rejected by one or more, it doesn’t mean that they will all come to the same decision. Getting a mortgage can seem stressful at times, but once the process is done it is more than worth it.