To many, taking the plunge and grabbing onto that first rung of the home buying ladder is a big and extremely scary step. One of the most important plunges in life can be securing a mortgage, as it’s not something that you’ll forget about, and will inevitably lead to years of repayments. Whilst is can be a scary process, securing a mortgage and buying your first home is also one of the most exciting life experiences. If you’re looking to secure a mortgage, here are our tips on how to make the correct decision.
Step One: Check out your current financial providers
As a starting point, to provide you with an initial idea, it’s worth contacting the banks and building societies who already provide you your current and savings accounts. If that’s more than one bank, then check with them all and begin to work up an idea of what offers are available to you. We aren’t guaranteeing anything, but from time to time, if you have accounts, previous mortgages or other connections with a bank, they can offer you a more attractive rate. Obviously, if you ring your bank, they’re going to give you a fairly one sided set of options, as they undoubtedly push their products. Make sure that all information provided is then noted down and researched further, to ensure you know the ins and outs of each option. Once you’re in the know about the options provided by your current banks and building societies, you have a solid base, and can begin to shop around to compare deals.
Step Two: Analyse the market
The next step for you to take is to gauge the state of the rest of the market. There are a load of great online tools for comparing finances, so make sure you have a good study of the available options from other high street providers. It’s not as simple as one option standing out above the rest, as most mortgages offer tailored features depending on what your financial situation is; many have a range of differing features and charges that you’ll need to consider, so make sure you do your due diligence and give your research phase plenty of time.
What to look out for: The Annual Percentage Rate is one factor that is important when you’re assessing options on the market. This figure takes into account the cost of fees on top of the interest rate quoted – for example booking and arrangement fees, valuation fees and other add ons. Obviously, finding a low rate that suits you, and ties in nicely alongside all the other aspects of a mortgage is of utmost importance.
Dates of significance throughout the life of your mortgage: You need to make sure that you’re aware if there are any dates where fixed, capped or discounted rates will come to an end.
What rate you revert to after any initial rate ends: If an option does have an initial discounted rate to start, you need to ensure you’re aware of what rate it will drop to once the introductory rate comes to an end.
How flexible are payments: One option that may be available to you is to select a mortgage with flexibility. It’s important to know whether you are able to make overpayments without being penalised with a charge.
Step Three: Talk to a mortgage broker
If you feel out of your depth when it comes to hard hitting finance, the best option you have available is to get in touch with an independent mortgage broker to provide unbiased help and information. Generally, mortgage brokers fall under two general categories. Firstly, there are brokers who offer advice scoping the whole of the financial market, entirely independently. This means that any advice will be given in your best interest, without attempting to steer you in the direction of particular service providers. There are also, however those which offer a restricted service – based on products from a limited number of lenders. Whilst both are entirely different from advisers in a bank, you should opt, if possible to speak with a broker who advises over the whole market.
Taking on board these expertise are a vital aspect of the selection process, and for a relative financial rookie, it’s definitely a wise move.
Are you a new home owner who has recently secured your first mortgage and home? If so, we’d love to hear from you, and be sure to add any possible pieces of advice in the comments box below!
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