You will need to find a mortgage lender if you want to buy your home. The cost of a home in most places is much higher than what people can afford, which means that they have to find the funding through lending facilities. It is already difficult to get a mortgage loan due to the thorough checks that have been put in place to prevent bad loans. It is even harder to get the mortgage with a fair interest rate, which means most mortgage packages will be too expensive in the long term.
Since you will spend a lot of time making repayments on your mortgage, you should find a fair interest rate. If your repayment package is too expensive, it could lead to a default, which will cost you your home and savings. These tips should help to guide you when making a mortgage application, and reduce your interest rates.
Smaller deposits attract more interest, which will compound into a much larger amount during repayment. When you are applying for a mortgage, lenders will consider the size of your deposit. Usually, lenders accept deposits of around 20% of the overall mortgage value. For lower deposits, they may add mortgage insurance of between 2% and 2.5% each year. On the long term, these additional expenses will drive up the cost of your mortgage. If you want to make your mortgage affordable, you should consider setting up a significant deposit.
Your mortgage options are not limited to banking institutions only. There are many other lenders who will offer better terms than your bank might, both in terms of flexibility and overall cost. Other financial institutions, such as Sacco, which offer financial packages at reduced rates. They are also more lenient with credit score checks, as well as other minor details that would affect your application if it were placed through a banker. Choosing alternative mortgage lenders could help you find the better deal.
Paying your mortgage over a long amount of time will attract more interest. Even though developing a repayment plan for a shorter amount of time will attract a higher interest rate, it will be much cheaper than making payments over the full repayment period. For instance, instead of going for a 30-year plan, you could consider taking up a 15-year repayment process. Despite having more premiums, the shorter repayment plan will cost you less!
Your credit score is important to all lenders. It helps them understand how you manage your loans, and is one of the biggest factors that lenders consider when giving out a mortgage. Most lenders will have a minimum credit score requirement. Borrowers with great scores are more likely to have their applications approved. They are also more likely to receive better rates. If your credit score is well above the minimum threshold, you could be charged up to 33% less interest than other clients.
You need to consider financial advice before taking up your mortgage. Since the interest rates are constantly fluctuating, and will do so over the course of your repayment plan, seeking financial advice will help you keep the costs in check. You will know when to lock in your interest rates, reducing the likelihood that your mortgage will incur additional charges. Locking your rates comes at a fee, which means that you should consider the total expense of either option to find the better deal.