April 20th, 2020
For many people, it can be difficult to get on the property ladder and it can be hard to find the ideal mortgage plan, particularly if you’re a freelancer, contractor or self-employed.
Due to the coronavirus outbreak, it can seem like an uncertain time to go ahead with mortgage plans. Mortgage lenders have reacted to the recent Bank of England base rate drop both positively and negatively but will certainly look to bounce back once the lockdown is lifted. To aid your preparations in beginning your search for a new home we’ve got five tips to reassure you and help you with the process.
Save for a deposit as soon as you can.
There are many different requirements for buying your first property and one essential item is being able to provide a deposit. Having a higher deposit available to put down on your from the outset will mean that you can save money by accessing lower interest rate products. Mortgage lenders tend to offer more preferential options to customers with larger deposits.
If you can only put down the minimum deposit required it can end up costing you more money, due to added expenses and interest rates. You may also need to increase the length of term to repay the mortgage over to keep the mortgage repayments affordable, which means paying more interest in the long term. It is advisable to monitor the lenders criteria and lending options as these are regularly updated. If you are unsure what is available please contact a CMME mortgage advisor.
Decide which interest rate is right for you
Choosing the right mortgage for you is vital in order to get the best value for money. The two main categories of mortgages are fixed or variable. Fixed-term mortgages are guaranteed to stay at a specific rate for the term agreed, whereas variable mortgages tend to fluctuate up and down depending on the performance of the UK economy and changes to the Bank of England base rate or a lenders own financial status.
Check your credit score and make sure you’ve got financial security
You should be checking your credit score regularly to make sure that your finances and investments are in good shape. Doing this will allow you to monitor your financial decisions and make sure you’re making the right choices.
It’s also a good way to ensure that you have financial security. Having savings, a low level of unsecured borrowing and a strong credit score are all things that are looked at when you want to apply for a mortgage. If you’re in good shape, you’ll be able to get your preferred mortgage deal.
You can find out more about managing your credit score – Download our guide
Decide what kind of home and area you’d like to live in
It’s important to know what options are available to you in the housing market. You should consider different types of properties such as flats or houses. It’s also important to decide which area best suits your personal requirements – are there schools or rail networks nearby? As a contractor it is advisable to consider travel expenses to and from work and how this will impact your income when you move home.
You should be realistic about what you can afford within your mortgage budget – scouting homes beforehand can help when it’s time to make the big decision.
Be prepared for additional costs and processes after you put an offer in on a property
Buying a property for the first time is a big decision and it can be overwhelming if you don’t know what to expect. This is why we recommend that you take the time to familiarise yourself with the buying process from start to finish. You can do this by talking to someone you trust who has an existing mortgage.
You can also do some research on what happens after you place an offer on a property that you like. We suggest that you keep a separate budget available for the closing process, as this will allow you to be prepared for any additional fees and services that you might need while the sale of the home is being finalised. It’s also a good idea to have an accessible pot of surplus money so that you can buy new furniture and update your new home when you move in. Something else to consider is learning to negotiate – you might be able to lower the cost of your home depending on the seller’s personal circumstances.
Keeping a budget for homeowners’ insurance is a good idea too. This will help you in the long run if you have any unexpected expenses.