When applying for a mortgage, lenders will want to check your income and outgoings to make sure that you could afford a mortgage payment comfortably. A few more facts about mortgages: It’s not loan for loan (the terms depend on the rate and status) and requires annual spending of at least 12,000 The total annual mortgage payment is at least 30 per cent of the property’s value and will always be higher than the purchase price If you’ve had a previous mortgage, it’s likely to be cancelled at the end of your mortgage period. Mortgage terms can vary considerably depending on the market value of the property. However, they all tend to be on a long-term basis and are typically set for up to 20 years (find out more here).
The repayment threshold is often lower than the value of the property, as the average purchase price is higher. In order to qualify for the same mortgage rate for a cheaper property, you’ll have to save more. Mortgage borrowers can typically refinance at any point before their contract expires. Banks and building societies often offer one-year and two-year fixed terms, and you can often even get out of your mortgage within a month of purchase! Some lenders offer flexible mortgage periods if you’re worried about mortgage repayments you can increase the interest rate or defer payments until the end of the month. Interest-only mortgages are available to those on low incomes, but are designed for those who have savings. You’ll pay some interest on a mortgage for periods of time, but you’ll only get the cash value of the loan for the period you originally made your payments.
Don’t forget that when you turn your property over to a mortgage company for maintenance and repairs, you’ll generally have to pay a larger percentage of your own mortgage, not the loan they offer you! See our page on mortgages for more information on different types of mortgages.
Home Buying Tips
If you’ve been to my page on house-buying before, you’ll notice that I recommend following the advice on mortgage terms as it’s likely to be more affordable than the alternative.
I strongly advise you also to include: If you’re a first-time buyer, consider applying for a mortgage with the Small Business Lender Direct (SBLCD) service it’s available from the Financial Ombudsman Service (FOS) and is a cheaper alternative to putting down a deposit. If you have an employment history, it might be better to secure an interest-only mortgage rather than a fixed-term mortgage. You could have a loan with a much longer repayment period but you’ll get your payments reduced while you are out of work and pay off the mortgage faster than if you held a fixed-term loan (interest-only). But take into account that you will pay the equivalent interest during the time you are in work (interest-only), so it’s important to compare costs and benefits carefully before committing!
Buy an estate agent to get an overview of the property before buying and make sure you search for the right agent and not the one who hasn’t seen any houses for years. Learn more about finding an estate agent.
Home Buying Advice For new home buyers, the key thing to bear in mind is that you are going to be responsible for the mortgage until you have made the full amount you’ve agreed with your lender.