Securing a mortgage is probably one of the biggest decisions that an individual has to undertake. It involves the analysis and examination of several financial factors, and is particularly difficult for first time buyers, as it is a completely new terrain. The entire process is nerve-racking, as saving money and avoiding common mistakes are all common factors that an individual ponders over.
Moreover, comparing costs and comparing deals emerging from different lenders is a process whereby the need for a mortgage broker is essential. These brokers can also help individuals understand whether they perhaps require a conventional or a buy-to-let mortgage, for which a buy-to-let mortgage broker’s expertise is a prerequisite.
A mortgage broker or advisor could help an individual understand and familiarise themselves with the various costs that are associated with buying a property, which a first-time buyer is possibly not cognisant of. These factors include:
- A solicitor’s fee
- The survey costs
- The removal costs
- Buildings insurance
- The initial cost of furnishing and decorating
- Valuation fees and mortgage arrangement
Put Together a Budget
Making sure whether they can take this step is highly important for first-time buyers, as a mortgage lender, will put the individual through several layers of financial checks to ensure the person possesses the ability to pay back the amount. The borrower will have to showcase their credit history, their credit score, their current income and their future plans, as a lender will evaluate them based on a range of factors. Hence, prior to applying for a mortgage, it is recommended to cut down all initiatives for carrying out any other borrowings, keep their debt-to-income ratio low, and shut down any inactive accounts, as they act as a loophole for the application process.
Comprehend the Importance of Saving For a Down Payment
Rather than spending unnecessarily, it is important to save up for paying off their down payment. Paying a higher down payment helps in various ways, as the individual is then liable to pay a smaller amount every month, can secure a shorter-term mortgage program and can secure a lower interest rate on their mortgage. If the person puts down a small-down payment and can’t afford to pay a huge sum every month, then they’ll be pushed into a shorter-term mortgage plan with higher monthly payments.
Before embarking on the home buying process, it is important to compare mortgage rates, slow down or completely eliminate credit activity and explore various mortgage options, before singling out any one option.