We are now at the third part of the Kickstart Your Journey Toward The Property Market series. Getting that Mortgage. The most exciting part of this journey, where you are ready to purchase your house. To make decisions on the type of house you would like, from New Build, Old Build, Semi-detached, Terraced, Detached. Choices are abundant but just because you want a five bedroom, detached house in the Countryside overlooking a lake or whatever tickles your fancy does not mean your bank account will be saying yes.
Hopefully, you have read and applied the points in Part one and Part two of this series.
MORTGAGE IN PRINCIPLE (MIP)
Before you can apply for a mortgage, and most of the time before you can make an offer for a property you will need to have a MIP, also known as Decision/Agreement in Principle. This serves as a confirmation that you have lenders who are prepared to lend to you. When you call an estate agent to make a request for purchasing a house, they will usually ask for this. If you do not have one, the estate agent can and will willingly offer you the services of their mortgage broker who can take you through all the necessary steps.
MIP is used to calculate whether or not you can afford the amount of money you wish to borrow. This is done by factoring in your income and outgoings. This also involves a credit check. Each lender has different criteria they uphold. Try not to overdo this as too many credit checks at one time. This will affect your credit score negatively. It is important to know that the MIP’s are averagely valid for a period of 3 months.
A mortgage broker is an in-between man/woman between you and the lenders. I personally did not use one, I do know however many know others that have used and recommended them. However, do bear in mind that they come at an additional cost. They have access to more lenders (over 170) and can compare for you straight away. But if you are trying to avoid cost you can speak to the relevant lender (bank or building society). It is best to weigh the options to see if you have the time and energy to do this yourself. Finding the right mortgage can be a daunting task and to have a rejected application will have a negative impact on your credit score (remember we want to keep that score tight and good). A mortgage broker will be able to advise you on which lenders will accept your application before you put it through. If you are clueless about these things and you do not want the hassle then I suggest you find one, it will be worth the cost.
YOU ARE ALMOST AT THE END!
Once you have found a house, made an offer either by yourself or with a mortgage advisor, your next step is to make sure you have a solicitor to complete the legal section of purchasing a house. These include stamp duty, land registration, building surveys etc, there is a whole heap that I will not bore with here. The process will usually take a couple of weeks to be completed. This will depend on whether the property is on a chain or not. There are different types of mortgages to be considered.
- interest-only mortgages
- repayment mortgages
- 95% and 100% mortgages
- fixed rate mortgages
- discounted rate mortgages
- cashback mortgages
- first-time buyer mortgages
- buy to let mortgages
- variable rate mortgages
- tracker mortgages
- capped rate mortgages
- offset mortgages
- flexible mortgages
As you can see the list is long and to elaborate on all we will here forever. But do not worry I will not leave you hanging. Here you can find all the necessary information about the different type of mortgages.
“you can do it if you put your back into it”