10 most shocking mortgage mistakes
1. Forgetting about your credit score
Your credit score can make or break your mortgage application. Any potential lender will want to know that you’re a responsible borrower and your credit report is the main thing that they rely on to find this out. So it’s advisable to have an understanding of your credit score before applying for a mortgage so you don’t get any unexpected surprises.
2. Applying for lots of mortgages
Each time you apply for a mortgage, loan or credit card a ‘footprint’ will be left on your credit file. Individually these aren’t a bad sign, but a lot in a short space of time will set alarm bells ringing with your lender. It’s okay to apply for more than one mortgage if you aren’t successful, but choose carefully, and try and seek independent advice to ensure that you are actually applying for suitable products.
3. Moving jobs
Lenders are looking for financial stability, so moving jobs just before you apply for a mortgage is a big no-no. If you don’t have a choice and you have to change jobs, then it may be worth waiting at least 6 months before applying for a mortgage to lessen the risk of your application being turned down.
4. Not doing your research
There are literally hundreds of mortgages available on the market, but not all will be suitable for your needs. It’s easy to get excited about a seemingly fantastic deal, but it’s not a good deal if it’s not right for you. Try to narrow down the mortgages that you can actually apply for and make that your starting point.
5. Only speaking to your bank
You may know and trust your bank so there is no harm in getting a mortgage quote from them, but you shouldn’t discount other providers as they may be able to offer you a much better deal. If you can’t face the thought of speaking to lots of different banks or building societies then head to a mortgage broker – a whole of market adviser will be able to access pretty much any mortgage that’s available, and can narrow it right down to what is the most suitable one for your circumstances.
6. Not saving a big enough deposit
Most lenders expect you to have a downpayment before they’ll agree to a mortgage, and typically the larger the deposit, the better rates you’ll have access to. It’s not easy to save a deposit – if you’re a first time buyer, you may want to take a look at the Help to Buy ISA.
7. Forgetting to lock in your rate
There are some amazing low mortgage rates around at the moment – with the lowest generally reserved for variable rate mortgages. These can be fantastic deals if you are willing – and can afford – to take a risk, however there are also some great fixed rate mortgages around. These will give you a little more security, protecting you from any interest rate rises.
8. Not considering the overall cost of your mortgage
So you know you can afford the monthly mortgage payments but don’t forget about the additional costs that come with buying a home. As well as needing an initial deposit, you might need to pay an arrangement fee for your mortgage. And you’ll also need to consider costs for a survey, conveyancing and depending on the property’s value, Stamp Duty will need to be paid too.
9. Not budgeting for home ownership costs
Don’t forget about the ongoing costs that come with being a homeowner. You’ll need to budget for general living costs, utility bills etc but it’s also worth having a savings account too as a buffer, as you never know when you’ll need to pay out for something that breaks!
10. Overlooking insurance options
Once you’ve secured your mortgage you’ll want to make sure you protect your investment. Home insurance (buildings and contents) will ensure that your property is protected, but it’s also worth considering life insurance or income protection insurance to make sure that your mortgage will still be paid if the worst should happen.
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The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.