Getting approved for a mortgage is often easier said than done. That is why you need to work with someone that can help you assess the practicability of the purchase of a home. To get the best mortgage, here are 6 factors that you need to put into consideration.
1. Issues that will affect your approval
Most lenders will not agree to give you money until they see the house you are interested in. Why? This is because they must know the total cost of ownership. This covers the actual price of the home, maintenance fees, any stamp duty fees, and other fees associated with the purchase of the house. The other factors they may look into is your employment and credit score.
While applying for a mortgage, you might want to have all these in order lest they might get in the way of full approval.
2. Portable mortgages
When choosing a specialty mortgage, like directors mortgage, it is advisable to pick a flexible one. This kind of mortgage allows you to move with it. This means that you can transfer the mortgaged property to a new home without incurring any costs. You will be able to transfer the mortgage to a new property while still maintaining the same terms agreed upon initially.
3. Pre-payment privileges
A pre-payment privilege means that you are allowed to pay part of the mortgage principal without a penalty. This means paying more than you are required to in your monthly installments. While mortgage rates may be low for some lenders, the terms do not come with pre-payment privileges. This is because by allowing that, the lender loses interest.
4. Compare the rates of several lenders
Do not be in a hurry. Take your time and do some shopping and compare the mortgage rates. Also, remember if you are shopping online, the price that will be provided is just an estimate. The lenders need to have your credit information to process an accurate rate. By having several options with you, you will be in a better position to pick one that best meets your needs.
5. Deposit
The size of your deposit can affect the interest rate you’re offered. Most lenders will ask for about 5-20% of the price of the home. Remember that the bigger your deposit, the higher the equity you will have on the property. It is worth noting that if you have a poor credit history you’ll be asked for a bigger deposit by lenders as you’ll be seen as higher risk.
6. Mortgage insurance
Mortgage insurance is there to protect lenders from defaulted mortgage loans. It is important to note that you don’t have to pay for insurance. Some investors do not have such requirements. On the other hand, if you make a high down payment, you won’t need insurance. Paying a high-interest rate or taking a second mortgage are the other strategies you can use to avoid paying insurance.
These are some of the considerations you should factor in your decisions for owning a home through a mortgage.
