Fail to shop around for the right mortgage deal and you might be handing over more of your hard earned cash every month than is necessary. Find the right deal and you could discover you can afford more property than you’d realized. So how do you go about ensuring you secure the best deal possible ?
1. Maximize your credit rating
A less than perfect credit score immediately reduces your options. Make sure you’re on the electoral register as it gives your rating an immediate boost and helps to verify your identity. Cancel any old credit cards you no longer use and pay off the balance of any that you still do. If you have an outstanding loan look at reducing it, and try to ensure you never miss or are late with payments. Check your current credit rating regularly and be aware of any potential problems before they arise.
2. Get independent advice
There are thousands of mortgage products out there with new ones being added and others withdrawn on a daily basis. An independent adviser will be aware of what products are available and can be particularly useful if your credit rating is less than perfect or you’re self-employed. Get advice online with Habito’s mortgage tool. They offer a fast, free and easy to use service.
3. Know your rights
Lenders and mortgage brokers must offer advice before selling you a mortgage. If you choose to reject that advice it’s known as an ‘execution-only’ mortgage that immediately waives away some of your rights to redress should things go wrong. The Financial Conduct Authority (FCA) has suggested that there should be more avenues for Execution-Only mortgages to help consumers and encourage competition. Borrowers should be aware of the potential risks involved before choosing to go it alone.
4. Boost your deposit
The average mortgage deposit in the UK now stands at over £60k and the lower the loan to value (LTV) percentage required the better the deals on offer. If you’re a potential first time buyer the earlier you start saving towards a deposit the better. Cutting down on a few luxuries and instead directing the cash towards a saving account could make all the difference. Choose a Help-To-Buy ISA and the government will top up your savings by 25%. If you’re already on the property ladder consider making a regular payment into an ISA or overpaying on your current mortgage. You’ll be grateful you did when it’s time to move up the housing ladder.
5. Ask the right questions and read the fine print
It should probably go without saying but make sure you know what you’re signing up for. Are there any hidden fees, what’s the lenders current standard variable rate, are there any penalties for early repayment ? Be confident you have the right information before signing on the dotted line.