Ten Things to Consider When Choosing a Mortgage

When looking for a mortgage or switching lender, it is important to do your research and carefully consider any major financial decisions.

Here are 10 tips from MoneySuperMarket to help people navigate the mortgage maze …

1. Understand your budget. Move forward by calculating your budget. List all of your monthly expenses and see what is left. Remember, it is always better to have some cash to spare for unexpected costs.

2. Decide what type of mortgage you want. With a fixed rate, your monthly repayments stay the same for the duration of the contract, which can help with budgeting. With variable interest rates, your monthly repayments may change depending on the interest rate.

3. Compare the entire offer. Don’t just look at the interest rate, consider mortgage fees or prepayment penalties.

4. Consider speaking to a mortgage broker. MoneySuperMarket has a mortgage advice guide on its website (www.moneysupermarket.com/mortgages/mortgage-advice).

5. Prepare your paperwork. Add bank statements and pay slips, ID cards, proof of address, P60s and documents to prove other income like child support.

6. Your creditworthiness is important. Before applying for a mortgage, get a copy of your credit report. If it doesn’t look that good, there may be easy ways to improve it. For example, check that you’re on the electoral roll and close unused credit card accounts.

7. Show consistency with your job. Lenders often want to see that you’ve been with their employer a long time. It is often a good idea to have been in your existing job for at least three to six months before applying.

8. Make as large a deposit as possible. The more you can put down, the greater the range of mortgages you have. Lenders reserve their best rates for those with hefty deposits.

9. Minimize your debt. Before you apply for a mortgage, try to reduce your debt – this shows that you are responsible with your money. It could also mean you can get more credit when it comes to a lender’s affordability calculations.

10. Take your LTV into account when rescheduling. When you take out new borrowing, take a close look at your LTV or Lending Ratio. If you’re on the verge of falling below a lower threshold, consider paying a small flat fee to get you to the next threshold. This could provide you with a slew of new deals with lower interest rates – potentially saving you thousands over the life of your deal.

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