Buying your first home will likely be one of the most exciting, yet scary, experiences of your entire life. There is so much to understand about mortgages that many first-time buyers don’t know where to begin. Even seasoned property buyers sometimes struggle. When you apply for your very first mortgage however, you obviously want to improve your chances of being approved first and foremost. Not only that, but you also want to get the very best deals that you can. As mentioned, there is a lot to get your head around when it comes to mortgages, but as they say; ‘knowledge is power’. Today we’re going to be taking a look at some common mortgages mistakes to avoid making.
Applying for a mortgage before checking your credit rating
First and foremost, one of the most common mistakes that people make in their pursuit of mortgages, is failing to check their credit rating before applying. Mortgage lenders want strong credit scores as this proves you are capable of managing your finances, and it proves you are reliable enough to not miss a payment. They want to know that the people they lend their money to are capable of paying it back regularly, on time, every time. Before you apply for a mortgage, check your credit rating and if it’s poor, hold off and do what you can to improve it.
Applying for new credit
Assuming your credit rating is high, when you apply for a mortgage you should not apply for any new credit at the same time. This can affect your outgoings and credit score, and if you were to make a large purchase such as a brand-new car on finance, this could cause your mortgage application to fall through before it was finalized. Remember, until the mortgage is finalised, hold off on that new credit card, that new car, or even that Caribbean cruise to celebrate. Any new credit could hurt your chances of approval, and that’s the last thing you want.
Not shopping around
Remember, there is a lot of demand for mortgage deals, and the lenders know that. We all know that they earn interest on their loans, otherwise there would be no point in them lending the money as they’d have nothing to show for it. Because the market is so competitive, there are countless potential mortgage lenders for you to approach, so don’t just go with the first offer you receive. Like insurance, and many other big purchases, it pays to shop around as doing so allows you to make comparisons, which in turn means that you can find the best deals.
Applying before you have a deposit
When it comes to mortgages, lenders love large deposits. The greater the deposit, the greater your chances of being approved, and the less your monthly rate will be in the process. Saving a hefty deposit also shows to the lenders that you are capable of managing your finances and saving money in the process, which helps build trust. Ideally you should look for at least 10% for a deposit, though the more the better.