Mortgage First Time Buyers
Before applying for any mortgage,
no matter how small, you must be
absolutely certain of how much
you can afford to pay back. If
you need to, get some independent
professional advice and make sure
that you have included everything
in your budget calculations. Be
realistic about the sacrifices,
such as a smaller car or the lack
of an overseas holiday, that you
may have to make in order to
repay your mortgage.
Obviously
the amount you can borrow will
depend primarily on the amount of
money you earn. Shop around for
the best deal or go to an
independent mortgage broker.
There are two things to bear in
mind when applying for a
mortgage: what is the percentage
of the house value you can
receive as a mortgage, say 80 to
95 percent, and what earnings
limit will the lender impose, a
typical example being three and a
half times your salary.
If you
are applying for a mortgage with
your spouse or partner, what
extra amount of mortgage is
available if two salaries are
available for repayment?
Many people applying for a loan
worry about being turned down,
but remember, lenders can usually
adjust loan terms in many ways in
order to help you qualify for a
loan.
However, if you are denied, there
are several steps you should
take:
First, ask the lender for an
explanation of their refusal to
grant you a mortgage. The most
common reason for declining your
application is insufficient down
payment, followed by excessive
existing debt and poor credit
rating. All of these can be
corrected with time however.
Second, ask for a review of the
decision. It is possible you
could still qualify if you can
satisfy the reviewer that your
credit was adversely affected by
an isolated and unpredictable
incident such as a major illness.
Finally, if the first lender
still denies your application,
try another lender. Just because
one lender feels you are not
qualified for a loan doesn't mean
they will all feel the same way.
Different companies operate under
different guidelines, and
although you may pay higher
rates, you may still be able to
find someone who is willing to
offer you a loan.
Mortgages are usually repaid over
any term between 5 to 35 years.
The longer the term however, the
less the monthly repayments will
be, but the extra interest
involved means that longer term
mortgages will cost you more in
total repayments.
The mortgage lender will also
insist that you take out a life
assurance policy and that you
also sign up for insurance on the
property and it's contents.
You will be required to pay for a
solicitor and you should take
some time to ring around and get
some quotes from solicitors
before you continue.
The mortgage lender will also
insist on an independent
valuation report to verify the
worth of the property. Again,
shop around for the best deal. It
may well be that you will need to
obtain a valuation before making
a final offer, especially if the
property is old or in obvious
need of some level of restoration
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