Following years of rock bottom interest rates, the base rate is beginning to gradually creep up again - taking mortgage deals with it.
With mortgage costs increasing, first time buyers and existing homeowners alike may be wondering how to secure a cost effective and affordable deal.
Here are a few things to consider:
Get to grips with 100% mortgages before applying
If you have a modest or non-existent deposit, you may assume that homeownership is completely out of your reach. Many people earn enough to manage mortgage repayments but they don’t have enough left over to save for a deposit. In response to this phenomenon, some lenders are offering a different type of mortgage to make it easier for first time buyers to get onto the property ladder.
For example, one particular lender is offering 100% mortgages to first time buyers - providing a relative can support them by placing 10% of the purchase price in a bank account offered by the lender. Under this product, the first time buyer can borrow up to £500,000 for their property purchase.
Unlike the 100% mortgages provided before the financial crash, it’s estimated this this modern type of mortgage should offer a little more security than before. However, if you opt for a 100% mortgage only to see the value of your home plummet, this could see you in negative equity.
Use a mortgage broker
Using a mortgage broker is widely considered one of the most effective ways of finding the best mortgage deal. Your broker will compare dozens of mortgage products from across the market before highlighting the ones that are most suitable for you.
Not only can your broker help you by finding you a great mortgage deal, they’ll also help to reduce the likelihood that your application is rejected. They’ll do this by using their expert knowledge of the mortgage market to identify the lenders most likely to approve your application while steering you away from the ones who are more prone to rejecting applicants for minor issues such as faults on their credit rating or a small deposit. In order to work out which lenders are most likely to approve your application, they’ll take into account everything from you income and expenditure to your deposit and credit rating.
Fix your mortgage
With Britain’s exit from the EU estimated to be just a few weeks away, there is a considerable amount of uncertainty in the economy. And with experts predicting interest rate rises as a result, it may be wise to fix your mortgage deal in order to protect yourself from fluctuating mortgage payments.
By fixing your mortgage for two years, five years or even ten years, you’ll be able to budget accordingly and ensure your repayments stay the same over the course of your chosen fixed time period.
If you’d like help finding the right mortgage deal for you, please get in touch with the team at TaylorMade.
