Buying a new home is an exciting and nerve-wracking process as it requires careful consideration and savvy investment. In order to afford the home of your choice, you will most likely have to borrow money to do so. Usually, this will be in the form of a mortgage as very rarely can couples or individuals afford to pay for a new home in cash.
Mortgages are borrowed for a set period of time called a term, on which homeowners are required to pay interest that is calculated according to the cost of the loan combined with the current mortgage rates. This is an important agreement as people who don’t honour their payments can forfeit ownership of their properties.
You can apply for a mortgage from a range of sources including building societies and banks, which tend to have quite strict credit and income checks prior to loan approval. Insurance companies provide certain types of loans, as do financial service providers and mortgage brokers. In the case of a mortgage broker, this may be an estate agent or insurance broker who will introduce homebuyers to the source of the loan. This is helpful in circumstances where the mortgage required is particularly large or unusual (such as a joint-mortgage) or the applicant is self-employed or has a fluctuating income.
You’ll notice that it’s important to have your finances organised before setting out to find the property of your dreams. This is important because there are many pitfalls and paperwork to overcome when organising the finance of your new home. When this arranged, however, the fun can begin, and you can search online and contact local estate agents in the areas of your choice to find properties that are open for viewing.
Remember to get independent financial advice from your banker, mentor or boss before signing on the dotted line.
Try to avoid taking out a mortgage in a hurry before you have a chance to consider all the available options. It may be tempting to present your finances to cinch the deal ahead of other eager buyers but ensure you can afford the monthly instalments before you sign on the dotted line.
This means you’ll need to have enough savings, or have access to enough funds, to pay additional legal fees and the cost of moving. Find more advice on applying for mortgages, searching for a new home and getting a good deal on home financing online.
Erin Taylor has a wealth of experience in UK real estate. She focuses on pieces regarding mortgages, rentals and the general state of the market.
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