The Top Factors You Should Bear in Mind when Applying for a Mortgage

We make a lot of decisions on a daily basis: what to wear, where to eat, what to do after work, and so on. But these are all decisions which can be made with ease if you know what you want. A decision regarding a mortgage, however, is an entirely different matter. It’s a major decision which will have a big impact on your life for years to come, so it follows that it shouldn’t be taken lightly. Are you planning to apply for a mortgage? Here are the top factors you should bear in mind when applying for one.

The deposit

One major factor in regard to mortgages is the deposit. Because of the financial crisis in recent years, many lenders have become more stringent when it comes to the required minimum deposit. If you want to secure a mortgage, you need to come up with, at a minimum, 10% of the property’s price. The higher your deposit, the better your chances of acquiring the ideal mortgage deal. One tip: if you can come up with a 40% deposit, you are sure of getting a lower mortgage rate, although a mortgage deposit of about 25% can also give you some good choices.

The arrangement fee

The interest and deposit aren’t the only expenses you have when it comes to acquiring a mortgage, however. There are other fees with which you have to contend, one of which is the arrangement fee. The arrangement fee (also known as the application fee) can be as much as £1,000 depending on the lender. The good news is that most mortgage deals have a flat arrangement fee, so it doesn’t matter how much you borrow – the fee stays the same. Be aware, though, that some mortgage lenders will charge an arrangement fee according to a percentage; for example, one percent of the size of the loan.

The best thing you can do is to factor in the arrangement fee from the beginning and find out from the lender whether they charge a flat rate or a percentage of the loan amount. If you’re not sure about your options, you should consult a good mortgage broker, such as the mortgage brokers from the Essex firm Flagstone.

Other fees and expenses

There are other fees and expenses you have to keep in mind as well. This includes the valuation survey, which is required by lenders for a mortgage application. The valuation survey will give the lenders a good estimate of the value of the property. Other fees include legal fees, particularly when it comes to conveyancing, and moving fees as well.

As long as you know what to expect, you should be able to get a good mortgage deal – one that’s perfect for your circumstances. Inform yourself about the different options out there and choose wisely.