Negosentro.com | If you are planning to buy a house in the near future, brushing up your mortgage facts is critical. This is all the more important if you are a first-time buyer. Unless you understand the concept of mortgage properly, you will not be able to apply and get it with ease. Plus, proper knowledge helps you to use the mortgage better once you get it. Let us share some key facts about the mortgage that every first-time home buyer should absolutely know.
Fact #1: Your credit rating does not necessarily affect the mortgage deal
Most first-timers believe that a low credit score will make the mortgage more expensive for them. This is not always true. Credit ratings do play a key role in deciding whether you will get a mortgage approval or not. But once you are through, the rates will probably be the same as those who get approved with a stellar credit score. The only hitch comes for those who bring a history of missed payments on a credit card or loan.
Fact #2: A huge deposit is not always necessary
While you do need a deposit while getting a mortgage, it need not be huge to get you an optimal amount. Essentially, the deposit is a specific percentage value of the house that you need to pay for availing a mortgage. This means that you pay for a portion of the property while the lender pays up the rest. The biggest concern for new buyers is that they may not have enough money to deposit a massive sum. Fortunately, you can secure a mortgage at a low deposit too, which means that you need not worry even if you have limited resources while buying your first home.
Fact #3: You can explore the option of remortgaging as well
Another fact that you need to know about mortgage is that you have the option to remortgage if you get a better deal in the future. The idea is to simply switch to a lower rate if and when you do get a better option. However, you need to find a deal that puts you in a vantage position rather than simply jumps at a lower rate. Samantha Kemp from Jubilee Finance says that while remortgaging is often a way to get lower rates on the remainder of your home loan, you should always get the advice of a professional to make sure it is the right choice for your situation.
Fact #4: The lowest mortgage rate is not always the best value
The overall mortgage cost is another confusing issue for the first-timers as they may be bewildered with the necessary calculations. You may think that the loans available at the lowest rates are attractive but this may not always be true. Low mortgage rates are often associated with high fees, making them effectively more expensive. The best approach would be to thoroughly consider all aspects of the deal, including the deposit value, mortgage period and fees to get a fair idea about what you will be getting as a package.
Fact #5: Having a mortgage plan in place is a smart idea
Obviously, you need not apply for a mortgage unless you find a dream home and are ready to make an offer. But being prepared with a good mortgage plan in place is a smart idea. Even when you have a vision of buying your first home sometime in the future, do get your mortgage facts straight and understand the options you may explore when the right time comes. Get an accurate idea of your budget and the deal you may get with the deposit you may have at hand. Know the parameters that would affect your lending capacity and work on getting them optimized in advance. This would help you grab the best deal when you need to.
Fact #6: Compare before you buy a mortgage deal
As a first-timer, it is imperative to feel apprehensive about cinching a good mortgage deal. The best way to handle things would be to find out some options and compare them to find one that is the best. You can check with your current bank to see what they offer to their existing customers. At the same time, there are many more lenders in the market that you can connect with. It is absolutely worth shopping around because you have good chances of finding a deal that is lucrative for you.
Knowing and understanding these facts about a home mortgage can be of great help, particularly if you are a first-timer. At the same time, collaborating with a reputed broker can help you secure a deal that gets you closer to your dream home without breaking your bank.