What’s the process for Applying for a Mortgage in the UK?
Firstly, it’s wise to be aware of the many different types of home loan you can apply for. There are secured loans, unsecured loans, all borrower-financed loans, buy to let mortgages and more. You’ll need to decide what kind of loan you’re interested in, for how much money and in which area.
After this, it’s time to find the best place for your application. The first thing you should look at when deciding where to go for your mortgage is the requirements of the lenders require of you. All mortgages will have different criteria, both in terms of your credit rating and how much the lender is willing to lend you. This applies both to how much you’re able to borrow and the interest rate you’ll be charged.
Each type of lender will look at slightly different things when judging you applications. Most, but not all, lend to people with the highest credit rating; the criteria they use will be based on whether you’ve built up a track record of paying your debts on time and repaying the loan in full each month. People with bad credit will often end up being refused mortgages by the same lenders simply because of their poor record. So how do you know where to go for your next mortgage? There are two main types of lenders in the UK – commercial lenders and specialist lenders.
Types of Lenders
To tell the difference between these two types of lenders, take a look at the different types and features they offer. Look at their commissions for mortgages and the amount of fees you’ll be expected to pay. While the total cost of borrowing can differ, you usually don’t have to pay this. However, the interest rates you’re likely to pay will be based on your mortgage provider’s specific charges. If you want the cheapest rates of interest then it’s a good idea to go with a specialist. Also, the majority of them offer mortgage insurance that protects the lender against the financial ruin caused by a payout.
A bad credit history is nothing to worry about. You won’t find it on your credit report, the only thing the lender will be able to do is to investigate the reasons for the negative entry. If you can show the entry was incorrect then the entry should be removed. The majority of lenders will want to see a history of bad credit before offering you a mortgage so if you’ve had problems in the past, it could be worth working towards rebuilding your credit.
As well as checking your credit history, you need to work out what type of deposit you’ll be required to put down. In the past, lenders required applicants to have a non-residential property as security for the deposit. However, the amount of deposit required has been reduced. Lenders now look more to the ability of the borrower to repay the mortgage than the value of the deposit.
You will also need to work out the purchase price of your property. This is the total amount you’re willing to pay for the property with a down payment. A mortgage provider will usually require a one or five year fixed deposit. Five years is usually the maximum, but some may allow up to ten years on a small deposit.
Key Facts
The key facts will contain all the information the lender needs to calculate the size of your loan and repayments. They should give you the date that the policy will start and end, the premiums you’re eligible for and the rate of interest that’s applied to the loan. It’s a good idea to get the completed mortgage application form from the lender, because this will provide an accurate accounting, done by a professional accountant, of the figures agreed. The final amount you’ll be asked to pay out can vary and is dependent on the lender and the type of mortgage.
