Buying a home is often one of the proudest moments in our whole lives, especially if it’s our first home. When the deal is done, and we pick up our keys, we pat ourselves on the back for having reached a point in life where we own our own property and can do with it as we wish. Unfortunately, we’re mostly deluding ourselves. Your property isn’t really ‘yours’ until you’ve paid off the mortgage on it. Miss a few payments on that mortgage, and you’ll soon find out that your home belonged to the bank all along, and they’ll reclaim it from under your feet if you can’t afford to pay what you owe them.
For the overwhelming majority of people, taking out a mortgage means taking on the largest debt you’ll ever have in your life – bigger than your student debt, bigger than your car debt, bigger than anything! It’s as scary as it is exciting, and doubly so when home repossession rates are increasing steadily. After acquiring a mortgage, your next priority is to get it paid off as quickly as possible, so there’s no risk of someone turning up to take away what you fought so hard to acquire a few years down the line. That means getting the best possible rate for your mortgage before signing on the dotted line.
If you’re not sure how to go about doing that, we’re glad you found our website today. Here are a few ways you can get a better rate on your mortgage, thereby getting the whole thing paid off sooner – and for less!
Pay A Bigger Deposit
We understand that saving for a deposit can be a slow, frustrating task. As soon as you have enough in your bank to cover a deposit, your natural instinct will be to use it and get your property bought immediately. Fight against that instinct. If you can save up enough to cover 10% of the value of a property, you can also stick with it a while longer and make it to 15%, or 20%. This is worth doing because the more money you put down, the lower your mortgage rate will be. This has two benefits – you’re borrowing less money than you would have done originally, and you’re paying a lower rate of interest on the money you’ve borrowed!
Tidy Up Your Credit Report
Just because you can get a mortgage doesn’t necessarily mean that you should. While you might get offered a mortgage deal based on a credit report that’s ‘good enough,’ you’d be offered a much better one of your credit report was spotless. If you have old missed payments hanging around, catch up on them and ensure that they show as ‘satisfied’ on your report. If you have old defaults, wait until they’ve dropped off your report before trying to borrow anything. Some people have poor credit scores because they have almost no credit history at all. The best thing to do in that situation is to take out a small credit card, use it once a month, and pay off the balance each month in full. When your credit report shows as ‘excellent,’ you’re in the ideal position to get a great rate on your mortgage. Anything less than that, and you can expect to overpay.
Take A Shorter Term
Your mortgage rate is, at least in part, a calculation based on how likely the mortgage lender thinks it is that you’ll pay them back in full. The bigger the risk they believe you to be, the more they’ll ask you to pay. They look at you the same way they’d look at games at an online slots website. If they were betting on roulette and chose only to bet on red or black, they’d have (almost) a 50/50 chance of success. If they were playing UK Casino, however, their chances of success are much lower because the outcomes of such games are generated randomly. The later in life you take your mortgage term, the more like an online slots game you appear to be your lender. Morbid as it might sound, if your mortgage term takes you to the age of 70 or beyond, there’s an increased risk that you’ll pass away before you repay your debt in full, and that risk will be reflected in the rate you’re asked to pay. Take a shorter term, and you’ll get a lower rate.
Use A Professional Broker
Comparison websites are great, but they’re not the only place you should be looking for mortgage rates and mortgage deals. Taking the cheapest deal you found on a comparison website might mean that you end up paying less than you would have done if you’d decided to go ahead through your own bank, but it doesn’t mean that you’re paying the lowest rate that might have been available to you. This is where mortgage brokers come in. Not only can they offer you advice, but they also have access to deals that aren’t available to customers directly and don’t appear on the high street. In some cases, the rates a broker can obtain for you will be half a percentage point or more lower than the rate you’ll be able to get on your own. Over a 25-year mortgage term, that can add up to a huge saving. That’s a good reason to contact a mortgage broker and get a free appointment for advice. Be wary of their fees, because in some cases, they might eliminate the benefits of any savings you make, but in many cases, it’s possible to make significant savings even with fees taken into account.
We know how hard it is to get a mortgage for young people and first-time buyers, and so we understand the temptation to jump on the first deal that’s offered to you. Banks also understand that, though, and that’s why the first deal you’re offered isn’t necessarily likely to be the best deal for you. Take a deep breath, and wait a little while longer. Don’t sign anything until you’re confident you won’t get a better deal and don’t settle for a bad deal just for the sake of getting a house. Houses will always be there. Your money won’t. Thing long term, and reap long term benefits!
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