The recent housing crash means that new mortgage applicants are finding it more difficult than ever before to secure a mortgage. Give yourself the best possible chance of approval and save money by following the tips below in part one of our guide for new mortgage applicants. Whether this is your first mortgage or your third, these tips could not only save you a lot of wasted effort but they could also save you a lot of money in the long term.
Check Your Credit Report
Take a good look over your credit report before making any mortgage applications – you need to check, and double check, to make sure that there are no errors. If there are any errors in your credit file such as incorrect addresses or phone numbers, you should take the relevant steps to get them fixed before making any applications. It’s also important that you file a notice of correction alongside any defaults or county court judgements to give your side of the story.
Although it might seem cheaper on the face of it, if you extend your mortgage up to a period of 40 or 50 years, you’ll pay thousands and thousands more in extra interest payments than if you were to keep the mortgage term below 25 years. It’s better to pay more money month by month to clear your mortgage than to pay less money over a longer period of time – and although this might seem counterintuitive, it’s definitely the best way to save money over the long term.
Stick With Your Monthly Repayment
Most mortgage lenders will allow you to overpay by up to 10% every year, so if your mortgage payment works out to be cheaper than your rent, or if your remortgaged payment works out to be cheaper than your current mortgage, although you might save a little money each month, if you keep paying your current monthly repayment you’ll clear the debt more quickly and you’ll save money on interest. If you were already paying that set amount each month, you can already be safe in the knowledge that you can afford to keep paying that amount each and every month thereafter.
Put Down the Biggest Deposit You Possibly Can
The more of a deposit you can put down, the lower your mortgage payments and the lower your interest rate. It’s important that you put down the biggest deposit you possibly can so that you can save money on interest fees and on your monthly repayments. Paying just an extra $2000 on top of the deposit that you already have in place will lower your mortgage repayments. In most cases, you should save up for as long as you possibly can before taking the plunge with your mortgage application – and if you can, stay at home with your parents to save on rental fees.
Come back in a few weeks for more top tips for new mortgage applicants.