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You have your deposit ready now all you need is to secure a mortgage and find the right property and you are on your way to owning your first home. It is an exciting time but it can also be fraught with mistakes so here are top tips for avoiding first time mortgage blunders.
- Get your score sorted - you may not be able to do much about your credit score now but knowing what it is and what deals it entitles you to is key to getting the right mortgage for you. You can find your score for free at Experian.com
- Limit credit applications - if you need a bridging loan or top up loan now is not the time to be applying for it. Applying for a mortgage requires a credit search, which means that lenders will be looking at your line of credit both open and debt. If you are applying for multiple credit lines at the same time this will dramatically impact how much a home loan company will be comfortable lending you so focus on your mortgage and leave other credit alone.
- Not shopping around for mortgage lenders - you might be tempted to stick to your high street bank for your mortgage, particularly if you have a good credit history. However even the larger banks don’t necessarily have the best deals. Shop around using mortgage comparison sites and you will see that some smaller lenders such as bay equity home loans offer bespoke deals that could save you thousands of dollars. Shopping around is vital if you have a poor credit score as it will increase your chances of securing a mortgage in the first place.
- Not getting pre-approved - you may think you know how much you can borrow but until you actually secure the mortgage on your home there is still some uncertainty. If you don’t want to waste your time looking at houses that may end up out of your price range you should seek a pre-approval from your lender to give you a more accurate budget for your real estate search.
- Taking on too much debt - most lenders will work with you to only give you the amount they feel you can comfortably pay back. That doesn’t mean you have to take the full amount if you don’t need it. Taking on more debt than you need increases your mortgage period as well as the interest you pay and can end up costing you far more than you had anticipated. Only borrow what you actually need. If you have a large deposit or don’t need a house that is quite as big as your budget would allow then save yourself many years of repayments by asking for less.
- Not quite got it- mortgage deals can be very confusing and the paperwork that comes with it totally baffling. Just because it takes time to read and understand the paperwork doesn’t mean you shouldn’t do it to get to completion quicker. Signing paperwork that you don’t fully understand can land you with huge problems in the future if your mortgage deal doesn’t turn out to be what you expected.