When planning on taking out a mortgage on a property there are some things you need to take into serious consideration before doing so. There are many checks that mortgage lenders will carry out on you before allowing you to have it so make sure you know exactly where you stand financially. Here is some information and checks you can do when thinking of applying for a mortgage to ensure you have the best possible chance of being offered the mortgage you are seeking:
Credit history – You can make sure your credit history is up to date and correct from when you get your first loan, credit card or if you have other mortgages. It basically consists of information on how prompt you were at making repayments, whether you fell behind with payments at any time, if you have been rejected by another company and if you have any County Court Judgement’s against you.
Different types of mortgage – There are two main types of mortgages but lots of variations that stem off both, the two main ones are Interest Only and Repayment Mortgages. An Interest Only mortgage works in the way that you are paying for the interest that is on the loan rather than the capital amount. The money you are paying off for the interest is put into a separate account and when the end of your mortgage term is near the interest money is used to pay the capital and you should technically be left with your mortgage completely paid off and with the extra cash that is suppose to be left over. However, there have been know problems with these type of mortgages because if you lose your investment that you have been paying your interest you won’t be able to pay off your capital mortgage payments and then you face the possibility of losing your home altogether. Repayment Mortgages are entirely different in the way you will pay off a little of the interest and capital each month so by the end of the mortgage term there will be nothing to pay and the house is fully yours. Many people think that this kind of mortgage means they pay more but that is just because you are actually paying the capital as well as the interest. This type is thought as the safer option as you are guaranteed the house as completely yours at the end of the term.
Another option you could look in to is the fact that the government can some times offer solutions for those first time buyers that are struggling in different ways. They are trying to build more properties at cheaper prices for those who don’t have enough money to buy a house. Also there are schemes that help Key Workers get a better deal on their mortgages than they would get if they were a normal worker with the same salary (Key Workers – people working in the health service, teachers etc.).