Mortgage Product Overview
Mortgages in most peoples lives are the one single biggest commitment that they have to deal with, and manage for most of their lives. If will be the biggest monthly commitment on a monthly basis, and it will be the most stressful commitment that people have to deal with every time the renew their product, or borrow more, or even when they move house. If you are doing a remortgage (this means just changing product, usually for the same amount) then it is not so stressful, most of the time it is straight forward. The most stressful time is the first time you actually take out a mortgage on a property, and you have little or no deposit at all, and the idea of owing that much money starts to sink in. If you are careful, and do your research properly then there should be nothing to worry about. Taking out a remortgage or a new mortgage product should be simple, straight forward, and ready for completion in a matter of weeks (subject to certain formalities). Before committing yourself to a mortgage product (especially for the first time), there are a few things that you should take into consideration. These are:
How much do I need to borrow on
my mortgage?
What can I afford to borrow on
a mortgage?
How much can I afford on a monthly
basis?
Over what period of time should
I take the mortgage over?
What product should I go for?
How can I find the best mortgage
product?
What costs will there be up front?
How much do I need to borrow on my mortgage?
Before you can answer this question,
you need to work out what is affordable to you. Once you have worked
out what you can afford (see next question for details on how). Then
you need to work out how much of a deposit you have saved. In today's
market you need about 5% deposit for almost any decent mortgage product,
especially when you are getting on the ladder for the first time. Mortgage
lenders are extremely cautious of first time buyers, mainly because
they have no record of payment on a mortgage, or loan as large as they
are about to enter into.
How much can I afford to borrow on a mortgage?
A little under ten years ago most lenders would not lend any more than 3 times a persons, or couples joint annual income on a mortgage product. However now that the price of houses have gone up at such a steep rate, where income from wages has not, most lenders are being forced to lend up to 9 times income in some cases it has been known for a lender to lend up to 10 times a persons annual income for them to purchase a house to when remortgaging to clear off some existing debts that they had. I would say that if you worked on 4 times your annual income, then you would be looking at a realistic figure of what you can actually afford. This does depend on other circumstances, financially and personally.
How much can I afford on a monthly basis for my mortgage?
There is no single answer to this question, but it is asked a lot. The only person who can determine the answer to this question is you. But you must be honest and realistic with yourself about what you actually spend on certain items. People have a tendency to talk themselves into thinking that their shopping bill every month in only ¡ê80 when really it is more like ¡ê220. By sitting down and doing a true income / outgoings calculation you can determine whether the mortgage is affordable to you or not.
Over what period of time should I take the mortgage over?
This should again be worked out on affordability rather than trying to clear the debt off as quick as you can. You do not want to lumber yourself with a huge debt, and not be in a position to meet the monthly payment.
What mortgage product should I go for?
The product that you go for is your choice, there is no right, or wrong product. It all comes down to rick, and reward, and market conditions. If you go for a fixed product (the product of choice at the moment) your payments will be fixed at a certain amount at a certain rate every month. If you go for a discounted rate, or a tracker rate, your rate, and payment could change on a month by month basis. Most people go for a fixed so that they can work out their budget on monthly basis with the security behind them knowing that there mortgage payment is not going to increase in the near future.
How can I find the best mortgage product?
The quickest, and easiest way if to use a mortgage broker like Advanced Finance Limited who are able to arrange a mortgage for you. We can find a product for you within minutes, with access to the whole market, Advanced Finance can arrange a mortgage no matter what your current financial situation. Simply complete the form above, or call one of our dedicated mortgage broker on 08449 111 000.
What costs will there be up front on my mortgage product?
This depends on your credit rating. If you have a good credit rating, and you are looking to remortgage, normally the only cost is a broker fee if you use a broker, other than that, you may get a valuation fee that you have to pay along with legal fees, however if you have a good credit rating, you may not have to pay them costs as the lender will sometimes stand in to pay them for you. If there are any fees, like a product fee, you usually have the opportunity to add these to the mortgage
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