So you’ve managed to scrape together some money for a deposit on your dream house but how much can you actually afford when it comes to mortgages? The best thing to do before you start looking at houses is to compare mortgage quotes. Don’t go with an estate agent because they can only compare a small handful of quotes compared to comparison websites and contacting the companies individually yourself.
When I got my deposit together the first thing I did was find out how much I could afford and what houses were available in my budget. Someone recommended a financial advisor from Bairstow Eves; the rates I was quoted were okay but I had a feeling I could have gotten better elsewhere.
I went on comparison websites to see what else was available and the first five results were actually better than what the financial advisor had quoted me on. I have a friend whose dad is a financial advisor and even the rates he quoted me on were not as good as doing my own research online.
A year ago you could easily borrow up 125% of the value of the home. This came in very handy for those who did not have money for a deposit let alone to furnish and decorate. What many younger buyers did not take into account was if the market crashed, they would owe the bank rather than making a profit when it comes to selling it.
To get the best quote possible for your circumstances, you should try recommended companies individually. It may take time and unnecessary input of information but you could potentially save yourself thousands. As the market for first time buyers is picking up again due to lenders relaxing criteria, shop around to find the best deal possible.
You may have to pay an arrangement fee or product fee; this will just be added on to the mortgage but if you can pay this fee, it is advisable as it will keep the repayments down. Remember if you have a product fee of £2500, you will still pay interest on this so if you want to pay off your mortgage quicker pay it off and don’t add it on to the mortgage.
If you have no choice than to go for a really high interest rate mortgage, make sure you can afford the monthly repayment fee because if you fall into arrears it may take time for finances to get back to normal. You may not be financially stable for up to a year whilst you repay all the arrears. Your home could also be reposed if you cannot keep up with repayments. If you are struggling financially, you should always consult your mortgage provider as they will be able to help you. They could offer you reduced repayments rates for a fixed period of time until you are back on your feet again. This will also prove useful if you have never defaulted on mortgage repayments as you will be seen as a loyal customer.