In all honesty, most of us don’t have a clue what we’re on about when it comes to mortgages. They’re really complex, which means we’re prone to making some costly errors. These errors can happen before you apply for a mortgage or while you currently have one. Obviously, we don’t want you to make these common errors – so here are the mortgage mistakes you need to avoid at all costs:
#1 Not improving your credit score
Always improve your credit score as much as possible before getting a mortgage. For one, it improves your chances of getting a loan. Secondly, the higher your score, the more trustworthy you appear. As a result, mortgage lenders may let you borrow more money or provide lower interest rates. Applying with a bad score can mean you’re stuck paying more thanks to worse interest rate charges.
#2 Not considering all mortgage loan options
Do you truly know what type of mortgage is the best for you? It’s important to choose the right option for your circumstances. If you’re planning on being a landlord, look into the different buy-to-let mortgage options. A normal mortgage will suit those of you looking for a home – but perhaps you may wish to consider a joint mortgage with your partner. Pick the right loan option to ensure you get the best deal for your specific situation.
#3 Not making the monthly repayments more manageable
When setting the mortgage terms, you can make life much harder for yourself. If the repayments seem a bit too high, request that the loan be extended. This draws out your repayment schedule and reduces each monthly payment. Thus, you’re not floundering every month struggling to pay your mortgage while keeping up with other expenses and bills.
#4 Not looking into remortgaging
After getting a mortgage, you should be aware of remortgaging. This basically lets you take out another mortgage from a different provider. Why bother? Because many mortgages have introductory interest rates that go up after a set period. Remortgaging can allow you to take out a better mortgage loan with lower rates, effectively meaning you pay less money over time. Forgetting to look into remortgaging often makes you pay tens of thousands more than you need to.
#5 Applying for a mortgage at the wrong time
Yes, there are good and bad times to apply for a mortgage. At the time of writing, it’s probably not the best time to get a mortgage loan. Why? Because interest rates are extremely high. Abnormally so, which means you’ll be paying way more per month than you realistically should be. Sometimes, it’s better to wait until interest rates go back to a reasonable level, making the mortgage more affordable.
Be honest, did you ever consider any of these things before reading this piece? Don’t worry if you didn’t – most of us know nothing about mortgages. That’s why it’s important to educate yourself on this topic before buying your first home. Armed with knowledge, you can avoid common mistakes and end up with a good mortgage that’s very easy to afford.
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