In 2022, house buying is widespread, but it is a long time since it has been so difficult to succeed in doing so. Prices are going up, jobs are harder to secure and finances are tight. For a young person, in particular, it is a difficult time to buy a house for the first time. However, it is possible and one of the first steps is to secure a mortgage.
How Much Do You Need for a Deposit?
Although many buyers (first-time buyers in particular) look for a mortgage deal with the lowest deposit possible. However, the reality is that the more deposit that you put down, the better the interest rates available, and so the better for your finances long term.
To access low-cost deals, it is recommended that you generally aim for a minimum deposit of 20%. That is 20% of the offer you are putting in for a house. Interest rates will then continue to reduce in 5% LTV (loan to value) brackets until you have at least a 40% deposit. Beyond 40%, the access will remain about the same.
Think realistically here about what you can afford at the best possible deposit. Don’t stretch your budget too far, but think about the long term implications of the deposit you choose to put down.
Steps to Take When Applying for a Mortgage
Mortgage rates are the interest rates charged on mortgages determined by lenders and the base rate decided by the Bank of England. Before the financial crisis in 2008, it was easier to secure a mortgage loan, but since, lenders have been more cautious in handing them out.
When looking to apply for a mortgage, there are some basic first steps for you to take. These include:
- Obtaining a credit report
- Getting an agreement in principle
- Choosing a mortgage type
- Get a mortgage outline based on the mortgage you have chosen
From here, the mortgage lender will want to see key documentation in their assessment of whether to give you a loan or not. This includes:
- Recent payslips (generally the last 3 months)
- Proof of residency
- Bank statements (the last 3-6 months)
- Utility bills
- Passport or another form of identification
- Household cash flow statements
- Any other documentation requested from the lender that is relevant to you
As seen, there are many steps in getting a mortgage and so in the process, it can be difficult to determine what the best mortgage is for you. That is where the help of a mortgage advisor is crucial in ensuring that you get the best possible deal for you.
Improve Your Chances of Getting a Mortgage
Before you start, managing as many certain details as possible will help give you the boost needed to improve your chances of getting a mortgage deal. Some of these details include aspects such as:
- Saving (as much as possible)
- Clearing your debt
- Putting down a healthy deposit
- Getting on the electoral register
- Improving your credit score
- Not switching jobs right before you apply for a mortgage
Get in Touch With The Mortgage Mom
Don’t know where to start? Get in touch with The Mortgage Mom. We offer mortgage advice in Birmingham and beyond. First-time buyer mortgages, remortgages, buy to let mortgages, bad credit mortgages, life insurance, critical illness, income protection, the lot. There isn’t much we don’t know when it comes to securing a good mortgage, and our client reviews are testament to that. Get in touch with us today to find out how we can help you.