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What you need to know
before getting a mortgage

Don't have a mortgage yet, but wondering what you need to know before you get one? Read on...

Getting a mortgage might feel like one of the landmark hurdles of adulthood. Here we walk through the ‘need to knows’ of getting a mortgage so you’re ready to start your house purchase journey.
What do you need to know?

The journey

  • Find out if/how much you can borrow
    You can find out from the bank, a mortgage broker or another lender, e.g. building society.
  • Get a mortgage in principal
    Don’t forget that lenders typically only offer a percentage of the value of the property, so you will need to find the deposit yourself for the remaining value.
  • Find your dream home and make an offer!
    Just make sure it’s within your price range.
  • If your offer is accepted, arrange a mortgage meeting
    Your lender will then ask for more details before formally accepting your mortgage, which will allow you to buy your house.
  • Find a solicitor
    Your solicitor then liaises with the solicitor of the seller, as well as with your bank (to sort out the details of your mortgage).

Then it’s all inventory checks, paperwork to sign, and exchange dates; it’s just a hop, skip and a jump from there to owning your dream house.

For further information on the home buying process please visit the Money Advice Service*.

Help is out there

There are plenty of government schemes that might help you get the much-needed funds to buy your home.

Help to Buy ISA

The Help to Buy ISA helps you save towards the cost of your first home. For every £200 saved by you, the government will contribute £50. The maximum government bonus is £3,000 – and to receive that, you’ll need to have saved up £12,000.

Want to find out if you’re eligible? Check the government website here*.

Help to Buy equity loan

Under new government schemes, it’s possible to get a low-interest loan towards your deposit, also known as a Help to Buy equity loan. To qualify you need to have a 5% deposit and the government will lend you up to 20% (up to 40% in London) interest free for the first 5 years. There are many other qualifying factors - check if you could get this loan by visiting the gov.uk.website*.

Buying through shared ownership

A housing association can help you buy a share of your home (25-75% of the value) and you then pay rent on the rest. Check if you fit the criteria to qualify here*.

How to boost your chances

It used to be the case that banks were bending over backwards to give mortgages, but it’s now a more competitive market with lenders able to pick and choose. 

There are a few ways you can help to make yourself more attractive to lenders.

Check your credit

Take an active step by looking at your credit score. Providers such as Experian, ClearScore, Equifax and Noddle give you the opportunity to see what lenders see when they look at your credit history.

Manage a credit card

Despite their bad reputation, credit cards can help show that you are confident and capable of paying back debt and can therefore help improve your credit history. If you do take on the commitment of a credit card then it’s important that you make sure it’s fully managed as you don’t want to miss any monthly payments.

Add yourself to the electoral roll

Strange as it sounds, adding yourself to the electoral register can actually have a positive impact on your credit history as it adds another reference point to your file.

Mortgages might seem complicated but, with a bit of research, you'll quickly get your head around them.

We’ve based the information in this article on our understanding of HM Revenue & Customs practice as at November 2016. Tax rules are subject to change in the future and depend on your individual circumstances.

Sources:

http://www.thisismoney.co.uk/money/mortgageshome/article-1669264/How-best-mortgage-deal-you.html
https://www.moneyadviceservice.org.uk/en/articles/choosing-a-mortgage-shop-around-or-get-advice
https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-isa
https://www.moneyadviceservice.org.uk/en/articles/money-timeline-when-buying-property-england-wales--n-ireland

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