Your Guide to Getting a Mortgage

For many people the most stressful and confusing part of buying a home is getting a mortgage. Whether you are a first-time buyer or moving home, securing a mortgage is probably going to be essential if you are going to be able to afford to buy your own property. A mortgage is a loan that is secured against your property, meaning that you can’t sell the house or flat without paying off the mortgage first (or by transferring the mortgage) and if you don’t keep up the mortgage payments the lender can repossess the house. It is crucial to secure a mortgage with a lender at the very beginning of the search process so that you have no barriers to negotiating when you find the right property.

In most cases, you will get the best mortgage deal when you can put in at least 15 percent of the value of the property, with the mortgage making up the rest of the 85 percent. If you cannot put in as much as 10 percent you are liable for a Higher Lending Fee, or what is also known as a Mortgage Indemnity or a Mortgage Guarantee Charge. When you borrow around 85 percent of the value of the property you can calculate to add 1.75 percent to the Bank of England Base rate to calculate the annual interest rate of the mortgage.

In order to find a mortgage it is helpful to initially look in a number of places. The estate agent can give you an outline of the broad variety of mortgages available. In addition, mortgage advisers like flagstone.co.uk can help. You can ask your bank or building society what they offer, and ask if your workplace runs any mortgage schemes for members of staff. There are a variety of options available in terms of financing a mortgage, from parents acting as guarantors to low-income schemes, and schemes for different types of workers for example teachers. If you are confused, get independent help from an adviser.

Mortgage lenders will look at your credit history as well as your earnings and other income. They will look at how often you have defaulted on payments and whether you have any existing credit agreements, and whether you have been declared bankrupt. If you have a poor credit record you can get a mortgage with a higher rate, or you can improve your credit rating before applying. It is more likely that you will find it difficult to get a mortgage with poor credit since terms have become stricter and lenders are less lenient. The self-employed will need to show business income from at least the last two years, and the lender will consider both incomes in the case of couples buying property together. You may be able to borrow more money if you know and can prove that your income is about to rise significantly. When you are considering how much to borrow you also need to be realistic and decide how comfortable you are with the loan, including being able to afford the repayments even if you were to fall sick, have a child, or lose your job, for example.

Louise Carr is a freelance writer. She creates content for finance blogs and websites including flagstone.co.uk.

Louise Carr writes for home and garden blogs and websites, including articles about services like http://bbsplumbandheat.com. She is a freelance writer based in Buenos Aires.