Tuesday, November 10, 2015

On The Lookout For A Mortgage – What Do We Need To Know?

As we get older, there are times when we can come across as naïve. It is not surprising that we don’t know how to buy a new car when we have never bought one before, or how to play the stock market. It is all a part of growing up and becoming an adult. You learn from your experiences and become a better person as a result. Still, we don’t want to make mistakes that could haunt us forever, like buying the wrong mortgage. A lot of people I know, myself included, are delving into the murky world of mortgages, so I thought I’d jot down a few tips.

What Can You Afford?
We all have a budget, and it is important that we stick to that budget. When it comes to mortgages, it could potentially cripple us for years because they are very long contracts. Some even last for twenty-five to thirty years, so we have to get a good deal. I now know that it is important not to overstretch myself and agree on a deal that could be hard to repay. Think about your current financial situation and your job security. Is there room to make more money? Are you secure for the foreseeable future? What’s the market like at the minute?

Where Do You Go?
Obviously, a bank is the first choice for most people. But, there are alternatives that can make finding an affordable mortgage easier. FHA approved lenders like AMCAP are a trustworthy source because they have the relevant accreditation. An AMCAP mortgage is always worth looking into if you didn’t get a good quote from the bank or you don’t trust them. I would always tell you to stay away from lenders that don’t have the right credentials. The odds are that they are loan sharks, and that is dangerous water to tread.

What’s My Credit Score?
Unfortunately, a credit score, if it is negative, will have a negative impact on any application. Poor credit scores show the lender that we are not able to properly pay bills and to take care of our financial requirements. As a result, they assume that we wouldn’t be able to keep up with the payments and the interest. A bad credit rating can lower the amount offered, or it can mean they won’t lend in the first place.

Can I Change My Credit Score?
Yes, a credit score isn’t fixed. Just because they are bad at the minute doesn’t mean they will stay that way forever. Personally, I find the solution a bit of a scam because we have to apply for credit cards etc. to improve our ratings. That means you have to get into more debt to prove you are eligible for a mortgage, which is bonkers! Still, to buy a property, it is the option for most people.

How Does A Mortgage Work?
Quite simply, we borrow money from the lender and then pay it back over a lengthy period. Depending on the mortgage, you could pay back the capital, the interest or the capital and the interest. Repayments often occur monthly until we pay off the full amount.