Buying a home is probably the biggest purchase you’re ever going to make. And you’lllikely to need a mortgage to do so.Mortgages come in a variety offorms, andcan appear confusing if you don’t know what you’re looking for.
What’s right for one person may not work for you.So, before you dive into anything too quickly, it’s worth spending some time ensuring you make the right choice for you.
What is a mortgage?
A mortgage is a loanyou take out to purchase property or land. You pay interest on the mortgage and your lenderusesyour home as security for the loan. This means if you can’t keep up repayments, your lender may take backyour homeand sell it to get their money back.
Most mortgages run for 25 to 35 years, but the term can be shorter or longer.
Howmuch money can I borrow?
Each lender will carry out a mortgage affordability test to work out how much they will lend you. Many mortgage providers have online tests that you can take on their website.
Your affordability will be based on your salary, plus any other incomeyou may have. This is then weighed against your current financial outgoings, including debts and personal expenses.
It’s important not to stretch yourself when deciding how much to borrow. Remember you need to think about the running costs of owning a home, such as household bills, council tax, insurance and maintenance.
Mortgage lenders may refuse to offer you a mortgage if they don’t think you can afford it.
How big a deposit do I need?
When buying a home, you need to pay a deposit. This is an amount of money that goes towards the cost of the property. It will needto be paid in advance, so you should already have the funds before you start the process of buying a home.
A deposit on a property is normally 10-20% of the overall purchase price, although shared ownershipmortgages can be as low as 5%. Remember – the higher your deposit, the lower the interest will be on your mortgage.
With a shared ownership home, your deposit could be as low as £2,000.
Where can I get a mortgage?
You can go directly to a bank or building society to get details of their mortgageoffers. Most lenders will have a range of different products available.
You could also use a comparison website to compare deals from different lenders, just like you would when getting car insurance. But you should be aware that comparison websites won’t show you all the options available.
However, unless you’re experienced with financial matters in general, andmortgages in particular, wewould recommend using a mortgage broker or independent financial adviser. These experts canhelp youtocompare mortgages and make the right choice.
We work closely with TMP–The Mortgage People, who provide expert advice and assistance to guide you through all the steps of getting a mortgage and moving into your new home.
Which mortgage should I choose?
There is no right or wrong answer to this. A mortgage should be tailored to suityour individual needs and expenses.
There are thousands of products available on the market, and the deals and interest rates available can changeon a daily basis.
Choosing a mortgage is one of the biggest decisions you’ll make, so it’s importantthatyou think it through carefully. If in doubt, we would always advise getting independent financial advice.
If you would like any more information onshared ownership homes and how a mortgage might work for you,our team arehereto help. Youcan email us at email@example.com or call us on 01782 854748.
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