Before you start mortgage hunting it is important to remember that there are several factors that can influence your mortgage rate. By availing of free property valuation, you can be a step closer to finding the best mortgage deal possible. Read on to know the five most crucial steps to follow in order to secure the lowest mortgage rate possible.
Make your credit score and credit report look good
It is never an understatement when you say having a perfect credit score, and an attractive credit report goes a long in helping you find the best rate mortgage that is most suited for your property buying plans. It is essential because the lenders use the information on your credit report to assess your credit history and analyse the risks of lending you a mortgage. When your credit scores are low for whatever reasons in the past, it is likely to give an impression of missing on credit payments when the lender assesses your reports. This is not favourable for you, and lenders may think you will be a high-risk borrower and charge higher interests to sanction a mortgage. On the other hand, if you have a good credit score and a pristine credit report, the lenders will be more than willing to provide you with mortgages at the most competitive rate of interest.
Now, if you are looking to improve your credit score, then there are various ways to do it. Initially, ensure that you audit your credit report periodically to spot the shortcoming and work towards fixing it. Another important aspect to look into to make your credit report look good is to enrol yourself in the electoral roll. This gives you an added advantage for your identity. Lenders are always looking for credible sources of verification that will improve your trustworthiness as a borrower. Hence even before you could apply for a mortgage, work towards improving your credit report six months ahead. Fix all the damages, avoid behaviours that will potentially affect your credit score, like missing a payment. It takes time to build a good credit report. But once you are done, you likely find the best mortgage rates that will help you in saving several hundred pounds in the longer run.
Go for the higher deposit amount
It is simple logic. The more money you deposit, the lesser you will borrow and the lesser you will pay in return. If you are a first-time buyer, then the most natural question that pops into your head is, “how much is my property worth?“. It is mainly because once you know the answer to this question, it becomes easier to plan for your financial future. It will also help in arranging the deposit you will be putting down for the property that you love. If you manage to secure a considerable amount as a deposit then your mortgage woes will be much lesser. You will easily be able to secure a mortgage at the lowest rate possible. Putting in a higher deposit will project you as a low-risk borrower. If you are able to put down a minimum of 40% as a deposit, you are likely to get the best mortgage rates from lenders. Deposits as low as 20-25% can also help you secure a good mortgage rate. Under the equity mortgage, you will be able to borrow up to 20% of the purchase price for five years without paying interest if you provide a 5% deposit which means you will now have a 25% deposit. If you are living in London then you can borrow up to 40% of your property’s value.
Shop a lot
If you are looking for a mortgage, then your bank is the ideal place to start your mortgage hunt. Most of the banks offer loyalty discounts and bonuses to their customers but still, it may not be the best rate of interest you can secure. It does not hurt to look around and enquire from various lenders for their mortgage deals. It is very crucial to ask several lenders before you make a decision because it is one of the biggest purchases you will make that can affect your finances for a really long time. owe it to yourself to shop around for a mortgage because it is one of the largest financial obligations you will ever make. You can also get help from a professional mortgage broker who will help you by presenting all the best options available for you. There are certain individual lenders whom you can access only directly. Here the mortgage brokers may not be of help, but it is still an option to explore for securing the best mortgage rates. While checking individual lenders you can make use of the internet comparisons to help you assess the best from all the possible options you have with you.
Check the expenses
Your monthly mortgage payment will take a huge space in your monthly budget. In spite of this and the total mortgage cost you will be paying, you need to keep an eye out for all the associate charges that come up with the mortgage. In some cases, these charges and additional expenses may affect the low mortgage interest rates and outweigh the actual benefits. In this case, it is wise to look for other options. The main three additional expenses that come with a mortgage are arrangement charge, overpayment fee, and early repayment fees. Carefully analyse these three aspects to learn if the low-interest mortgage is actually beneficial in the longer run.
Have an open mind
It is the case that you will be stuck with a lender for the entire tenure of your mortgage. You can always opt for a remortgage at a much cheaper option in the future. But remortgaging is not always the best idea, especially if you have just begun your mortgage or if you are close to completing your repayments. Usually, both these scenarios outweigh the benefits of remortgage. A remortgage is a great option when the term on your fixed rate is coming to an end. Remortgaging at this stage will help your mortgage to be at a regular variable rate. Look for remortgages where the early repayments fee is low.