9 THINGS TO CONSIDER WHEN APPLYING FOR A MORTGAGE IN 2023

Buying a house, whether it’s your first home or your fifteenth, is a very exciting time. However, it is not without it’s stresses, and one of the biggest causes of this can be applying for a mortgage.

Getting a mortgage involves several steps and considerations, particularly in the current economic climate. Rising interest rates and the current cost-of-living crisis are just some of the factors that have affected the property market and a person’s ability to get a mortgage.

Mortgage brokers who deal with the whole of market have come in handy during these complex times.

Is now a good time to buy a house?

Rates are still significantly higher compared to 2022 and nobody can be certain how interest rates will move in future.

Is now a good time to buy? It comes down to whether or not you find a mortgage deal that works for you and your lifestyle.

Applying for a mortgage

Here are nine key things to consider when applying for a mortgage or a remortgage.

Assess your financial situation

Before applying for a mortgage, evaluate your current financial position. Calculate your income, expenses, and savings to determine how much you can afford to borrow and repay each month. It’s also worth considering additional costs you may encounter once you buy a property such as income protection and moving.

Check your credit score

Assessing your financial situation includes checking your credit score. Lenders assess your creditworthiness before approving a mortgage. Obtain a copy of your credit report and check for any errors or issues that may impact your score. You can do this by signing up to one of the many free credit score checkers.

Save for a deposit

Start saving for a deposit as early as possible. The larger the deposit you can provide, the better your chances of securing a mortgage with favourable terms. Aim to save at least 5-10% of the property’s purchase price. If you are a first-time buyer, research whether a Lifetime ISA would be suitable for you.

Set your expectations

Be aware that any bonuses, overtime or additional income you receive may not be accepted as part of your annual earnings by a mortgage provider. To apply for a mortgage, you’ll typically need proof of income, bank statements, identification documents, and details about the property you intend to buy. Gathering all these in advance helps speed up the process when you find a mortgage.

Check out government schemes

Investigate government schemes available in the UK. The government offers several schemes to support buyers, such as Shared Ownership, specialist loans, and Right to Buy. Research these schemes to see if you qualify and if they can help you secure a mortgage.

Research mortgage options

Familiarise yourself with the various types of mortgages available. There are fixed-rate mortgages, where in which the interest rate remains the same throughout a fixed term, typically 3 or 5 years. Variable-rate mortgages mean the interest rate can fluctuate over the life of the loan so your monthly mortgage payment can go up or down depending on changes in the market. Consider the interest rates, repayment terms, and flexibility of each option to determine which suits your needs.

Compare mortgage lenders

Shop around and compare mortgage lenders to find the most competitive rates and terms. Consider both high-street banks and specialist lenders. If you are unsure, seek advice from a mortgage broker to make informed decisions.

Seek professional advice

Speaking with an Adviser could be beneficial. By consulting an independent mortgage broker, you will gain guidance on the available options, assistance with the application process, and they will be able to find the best deals for you. It can also reduce the stress of having to do all the research and applications yourself.

Understand the timeline

You may be waiting up to a month before you receive a mortgage offer – and that’s if they don’t require any further information from you. Timelines for how long it can take before you receive a decision in principle can vary and mortgage providers may require further information from you.

It’s essential to conduct thorough research and carefully consider your financial situation before committing to a mortgage and is advisable to talk to a mortgage adviser.