Purchasing a house is one of the biggest financial decisions you will make in your life. This is why finding the best mortgage rates is crucial when you are a first time buyer or when you are shopping for a second mortgage. If you want to know how to get a mortgage that best fits your requirements, financial situation and property type, it’s best to apply some sound mortgage comparison principles.
What is a Mortgage?
A mortgage is a type of loan you can take out from a bank or lender to finance a property purchase. The amount of mortgage you can borrow depends on several factors, including your deposit for the property, your earnings, the property value and credit history. The amount of mortgage you can take out is usually calculated as a percentage of the purchase price, which is called a loan-to-value or LTV.
There are several benefits to taking out a mortgage – you can start using the property immediately and spread out your costs for lower monthly repayments. Whether you are looking for a buy to let mortgage and plan on renting out the property after purchase or living there yourself, a good mortgage rate is essential.
Before making a decision, it is best to compare mortgages using a mortgage finder service and pick the one that best fits your situation and needs.
Mortgage Terms are usually different than those of standard bank loans. Mortgages can be taken out for longer periods of time, up to 20 to 35 years. There are fees associated with taking out a mortgage and they vary from lender to lender. There are also interest rates charged on the mortgage.
Mortgage interest rates are the rate of interest charged on a mortgage. They are determined by the bank or lender. Generally, there are two types of mortgages:
- Fixed rate mortgages
- Variable rate mortgages
Fixed rate mortgages have a fixed rate that remains the same throughout the entire life of the loan, meaning that your monthly payment of principal and interest remain the same over the period of the mortgage. For variable rate mortgages, the rate fluctuates with a benchmark interest rate.
Choosing your Mortgage
The different types of mortgages are suited for different purposes. Whether you want to remortgage, finance a home purchase or take out a buy to let mortgage – it is best to compare mortgages to find the one that offers the best terms and rates for your situation.
As a first timer buyer, your eligibility for a mortgage will depend on the following factors:
- Your personal profile and credit history
- The property value
- The lender’s own criteria.
Each lender will look at how much you can afford and put down as a deposit before deciding how much you are eligible to borrow.
A mortgage is an ideal way to finance a home purchase. It is the first step to show that you’re ready to buy when it comes to making an offer on a place. However, a mortgage is not a guarantee that a lender will let you borrow the amount you quality for. Instead, it shows the amount that the lender is prepared to loan you based on the information you have provided. They can still decide not to lend to you when you come to make a full mortgage application. This is because a full mortgage application looks at your full credit history and current financial situation.
Buy to let
If you are planning on a home purchase with the intent to rent it out, then it is best to look at and compare the best buy to let mortgages on the market. One benefit of a buy to let mortgage is that it is usually an interest only mortgage. Your monthly payments will only cover the interest and the money you’ve borrowed will not go towards repaying your mortgage unless you want to make extra payments.
When should I get a Mortgage?
A mortgage can be a prudent financial decision. If you want to be a homeowner but don’t have the full amount for a home purchase or want to buy a new property to rent it out – you can benefit from mortgage deals that give you greater financial freedom and control of your living situation.
What influences your Eligibility for a Mortgage?
When you wonder ‘How to get a mortgage?’, it is important to understand what factors influence your eligibility for one.
Eligibility for a Mortgage
Banks and lenders have certain criteria when they look at each individual application. Generally, they will look at your employment status, personal profile and credit history, the property value, and some additional information. Other factors such as the current economic climate can also affect your eligibility for a mortgage.
Based on the type of mortgage you apply for, there may be additional criteria you need to meet. For a buy to let mortgage, the amount you can borrow is based solely on the expected rental income. Otherwise, all banks and lenders will expect applicants to provide proof of identity and financial situation, amongst other documents.
A remortgage lets you switch your existing mortgage to a new lender or move to a different deal with your existing lender. It is possible to remortgage with bad credit and you might be able to find lower interest rates and better mortgage terms when you compare mortgages.
When you are looking to remortgage your property, the bank or lender typically looks at your monthly repayment history to see if you have been late on payments. The amount you can borrow will depend on your current financial situation. Lenders will look at your income and expenditures as well as your credit history.
How to Compare Mortgages
Our table can help you get a better idea of how much you can afford to borrow, and which lenders offer the best mortgage rates and best mortgage deals. We rate and compare them based on a wide set of criteria, including their rates and fees, payment terms, and customer support and benefits to help first time buyers to find the company which will bests suit your needs.