The home buying process can be one of the most rewarding experiences of your life; it can also be the most exhausting! Once you find your dream home you’ll need to secure the right mortgage. Even an experienced homebuyer might fall prey to some of these costly mortgage mistakes, so be sure to read on for five of the biggest to avoid.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Five mortgage mistakes to avoid
(1) Not paying attention to the Annual Percentage Rate of Charge
Don’t be fooled by seemingly rock-bottom interest rates. Many banks flaunt these rates in the hopes of enticing potential home-buyers by assuming they don’t look “behind the curtain” at the other elements of the deal: application, product, and redemption fees.
UK lenders must advertise the Annual Percentage Rate of Charge (APRC), also known as the overall cost for comparison percentage, which takes into account any and all fees or costs associated with the mortgage. This helps you compare mortgage costs across providers, but the calculation does assume that you’ll have the same lender for the entirety of your mortgage.
Nowadays, with remortgaging often providing overall better deals, the APRC shouldn’t necessarily be the only thing you rely on, but it’s certainly useful during your selection process.
(2) Not being prepared for the affordability test
Gone are the days when lenders just needed your monthly income to decide if and how much they’d lend you. In the current climate, a “stress test” was developed to help banks and building societies determine whether or not a homebuyer can afford their mortgage repayments.
To be prepared for this affordability test, you need to put together a comprehensive budget that details your income and outgoings to remain transparent about your finances and be sure you have the evidence to back up your statements.
You should also try to pay down as much debt as possible because providers will undoubtedly take outstanding loans and bills into account when determining how much they’ll lend you.
(3) Not giving yourself enough credit
Knowing and understanding the factors that contribute to your credit score can make a massive difference. Knowing ahead of time what is on your report will give you time to correct any issues or oversights and remedy anything that impacts it negatively.
Contact one of the credit reporting agencies for a free to low-cost check.
(4) Not going pro
Many lenders offer “professional mortgages” to trainee or qualified professionals (lawyers, doctors, dentists, or teachers.) Because of their professional status, these groups of people may enjoy a special rate or sometimes, even a bigger loan.
While the eligibility criteria are different from lender to lender, providers take into account age, professional qualifications, or even registration with their particular professional governing body.
(5) Going it alone
Perhaps the biggest mistake you can make is trying to get through the entire process without any help. It’s a daunting task finding the right mortgage (at the right price) for your situation and going through the application process can be taxing and complicated. If not done right, you could end up paying big time.
Our professional mortgage brokers at Dental & Medical Financial Services will help you to dodge all these mortgage mistakes during the home buying process, and strive to help you from start to finish.
Contact us when you’re ready to embark on your house hunt to benefit from our years of knowledge and experience in securing mortgages for dental and medical professionals.
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Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years. Call Chris to discuss your options.