News from Reuters reports that UK mortgage approvals are currently at the lowest they've been for 2 years (http://uk.reuters.com/article/uk-britain-lending-idUKKCN11Z0TC), why is this?
Granted, house prices are expensive, and there is a lot of debt around but debt hasn't traditionally been a big 'make or break' reason for people not to apply for mortgages.
People's apparent willingness to accept debt has been noteworthy of late. The British people seem to embrace debt with open arms - at least during boom times. The last boom years of 2003 - 2008 saw lots of 'free money' being given away - this 'feel good' attitude persuaded many of us to take on debt, and this study regarding the amount of uk household debt makes interesting reading.
People in the UK seem to still want to buy houses - in Europe this is very different with many more people willing to rent property. This is not necessarily a good idea on the part of Europe in my opinion, as what as house gives you (once you eventually own it) is an asset that you can use in later life. Renting a property gives you no such advantage.
With money being tight at the moment it's imperative to find a mortgage that works for you as cheaply as possible. Don't go to banks, don't go to building societies, they will only sell you their own products, use an independent mortgage broker who will find you the best deal. Doing this one thing will save you thousands of pounds over the lifetime of your mortgage.
What Is A Mortgage ?A mortgage can be seen as a loan that is secured by property or real estate. It is a loan to finance a home. A mortgage is legally binding and gives the lender the right to the real estate property in case the borrower defaults. The lender retains ownership of the house and sells it to recover funds the borrower owes. Simply speaking, until the loan has been repaid, the property is owned by the lender but is operated by the borrower. A mortgage always involves a collateral security which is the home or real estate property. Repayment is always includes interest payments, taxes and insurance
Getting A Mortgage
Firstly, I had to
make the decision of getting a home for myself. I had to make the
decision of acquiring a home. This step was a matter of choice and
decision. Next, I had to figure out how much I needed to borrow from
the mortgage broker. I had to loan what I was able to afford. In order to
estimate affordability, I put a lot of things into consideration so I
create a worthwhile budget. I considered my income level and my
debts. I had to make sure my income will be able to cover my common
debts as well as finance the repayment of the mortgage. I also made
sure I repaid as much of my debts as possible. I had to analyse my
debt to income ratio. I also had to analyse my expenses. Make an
estimated cost of my living expenses to make sure my mortgage choice
and plan does not seriously counter act with my day to day living. I
also had to save income for a deposit. A deposit is the
initial amount paid at the time of purchase. Mortgage loans are of
different types and vary depending on the type of mortgage you want.
For example those seeking to acquire mansions should apply for a
jumbo loan. As for me I was applying for a loan to get my first house
I had to apply for a first time home-buyer loan. The conditions here
were more favourable. Never go for a jumbo loan if you wish to
acquire just a first time buyer home. The next thing I had to do was
where to get my mortgage. I had a list of destinations from which to
choose: mortgage broker, specialist mortgage provider (eg. the Halifax, Northern Rock etc), a retail bank (Barclays, HSBC etc). In the end, I had to go with
a mortgage broker in order to facilitate the granting of my loan.
Choosing a Mortgage Broker
Choosing a mortgage broker was difficult because most of them seemed strange and charged extravagant prices. I had to keep searching thoroughly till I bumped into a certain broker (a lady) who fitted the bill so effectively and offered her services at a fee more affordable. Despite the difficulty I faced in finding a broker, the moment I got the right one everything went fair and smooth. First she did all the paper and legal work required when obtaining a mortgage, asked me what home plan I pursued. She then suggested me the right loan which was suited to my plan. I thank God for her. The advantage with getting a mortgage broker is that your work load and time is being reduced. This applies to a good broker. That is why you have to be careful when selecting a broker. With going solo it is good because you get to do all research alone and get some good knowledge. However it is very time consuming and confusing as it involves a longer and larger process. After getting in touch with a good broker, I had to go to my bank in order to verify my credit history to make sure my transactions where intact and do the necessary corrections. Luckily for me, everything was fine and void of errors. Evidently the process was extremely difficult and strenuous. However, everything went in my favour and I was financially sufficient to apply for the mortgage. What I had left was to compile the necessary documents. Below are the list of documents I compiled
Proof of income and source of income-proof of employment. This is to show I am able to finance the repayment of my loan within the time range.
Proof of assets.
Having gathered all of these documents, I was given a pre-approval document by my lender. A pre-approval document is not an approval for the mortgage. It is some kind of document which puts you in the waiting list. It puts your situation on hold, while the lender reviews your credit history capacity capability, financial statements and all other relevant documents at his disposal to determine your viability and capability.
Other people have different experiences when obtaining a mortgage. Some people fin theirs difficult and strenuous just like my experience for others it was simple as mastering the letters of the alphabet. Bottom line is difficult or easy, when approved we all wear smiles on our faces.