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Mortgage Adviser Advice - Are mortgages only for houses?

The mortgage process is pretty similar regardless of what type of property you’re going for. Carry on reading if you want any advice on your mortgage application!

When you buy a home, it is likely to be one of the biggest financial commitments of your lifetime. But, it can also be one of the most overwhelming. In essence, mortgages are used to buy either property or land. So, in short, mortgages aren’t only for houses. Most mortgage advisers will tell you that for your mortgage to run smoothly you’re going to need to know all the ins and outs of the house buying process. Read on if you want to know what they are!

Mortgage Adviser Advice

What actually is a mortgage?

A mortgage is basically a large loan that you borrow from a bank or building society to pay for a new property or a piece of land. Like any other commercial loan, your repayments will be made up with part paying down the amount borrowed & part covering the interest you are being charged for borrowing the money. 

How much can I afford to borrow? 

All mortgage advisers suggest that you don’t burden yourself with mortgage repayments that you won’t be able to keep up. After all, when you move into your new home, making mortgage repayments are only one side of the coin. You’ll still have to pay your council tax, living expenses, utility bills, insurance etc. So in short, there’s a lot else to consider.

What lenders do to see if you can afford the mortgage amount that you are applying for is conduct an affordability assessment. This basically involves your lender assessing your income, current outgoings and your credit score. Think about it, lenders are going to be releasing a large sum of money to you so that you can purchase your new home but all they have to go on to make this decision is how much you earn, how you spend your money & your ability to make payments on any money you have borrowed (your credit history). If you don't have a great income or you have defaulted on loan / credit payments in the past then you're not painting the besty picture for a safe bet. This will ultimately affect the amount you can borrow & at what rate of interest.

Where should I go to get a mortgage?

Mortgage applications typically start by going either to a bank or building society and choosing a deal that they offer. Mortgage advisers, such as ourselves, or independent financial advisers can also be a great asset for you before you sign on the dotted line for a mortgage deal. This is because they can compare a plethora of different mortgages on the market and whether certain lenders have any charges that you may incur when you first contact them. With an independent mortgage adviser you are recieving advice on products from a whole range of lenders whereas your bank or building society will only be able to offer advise on the their own products.

How much should I pay on my deposit?

Deposits are basically a lump sum of money that goes towards the property that you wish to buy, Mortgage advisers will advise you to think very carefully about how much you put down for your deposit. Although it’s possible to put down a very small deposit this won’t help you in the long run as it may mean you have to pay more interest. However, paying too much deposit money could leave you short for such things a sstamp duty, legal fees etc so, be sure you are aware of the costs you'll be incurring.

The more deposit you can commit to the better the mortgage rate you'll be able to secure. This is because the banks loan represents a smaller amount compared to the overall value of the house which basically means their money is safer than if they were more exposed with a loan that was close to the full value of the property.

 

For completely impartial advice & to find out just what you can borrow why not contact Mortgages.Online today.

LauraWaller

Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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