Everything you need to know about mortgages: how to get one from us directly, and how much you can borrow.
WHAT IS A MORTGAGE ?
A mortgage is a loan you use to buy a property. You usually pay back the amount you borrow as well as interest. Unless you have the money to pay the full price of the home you wish to buy, you’ll pay for the rest with a mortgage.
The amount of interest you pay depends on:
• the interest rate you’re on
• how long your mortgage is for
The interest rate you pay depends on:
• the size of your deposit
• how you’ve managed debt in the past
• the type of mortgage you choose
You pay back part of your mortgage every month for a certain number of years. Most people take out their first mortgage for 25 to 30 years. You may not have have the same mortgage lender all that time. This is because many mortgages have a reduced rate for a certain period, often for at least two years. When that period ends, people tend to switch to another mortgage that has an initial reduced rate. Switching mortgage lenders is remortgaging.
If you do not pay your mortgage, your lender could take your home from you. If they did, it would be much more difficult for you to get another mortgage.
HOW TO GET A MORTGAGE
It can take from a few weeks to several months to get a mortgage. Here’s how.
Step 1: Work out how much you can borrow
Work out how much you can borrow with our mortgage calculator.
You’ll need to put in:
• salary
• deposit
Once you know how much you could borrow add up the other costs such as:
• stamp duty
• solicitor / legal fees
• moving
Step 2: Get a Mortgage in Principle (MIP)
A MIP is a document that says how much you could borrow, in principle. There's no guarantee that you'll get a mortgage if you get a MIP or a mortgage for that amount. MIPs are useful to have as sometimes an estate agent will want to see one before they pass on your offer to a buyer.
Step 3: Look for a home
Use websites such as DCANSProperties.com or any other seller to find homes you can afford and register your interest. Do not wait for the perfect property as you may never find it. Make an offer that suits your budget.
Step 4: Choose your mortgage
Contact your mortgage broker or lender when a seller accepts your offer. A broker has a much wider choice of deals than a lender. DCANS Mortgage, a direct lender can only offer you our mortgages.
Step 5: Find a Solicitor / Lawyer
A solicitor/lawyer who deals with buying a home is also known as a conveyancer. It’s a good idea to ask around for a recommendation as there can often be problems when buying a property. And some solicitors/lawyers are much more expensive than others. Your mortgage broker or estate agent may also suggest one, but you do not have to use them.
Step 6: Apply for your mortgage
Get your documents ready. As well as bank statements, we’ll need proof of:
• address
• ID
• income (Payslip and SSNIT Statement)
• deposit (bank statement)
As part of processing your application and we may do a credit check.
Step 7: Get a valuation
A lender needs to value the property to see how much it’s worth in case they have to sell it if you do not pay your mortgage. There’s a chance they decide the property is not worth the price you’re paying for it. This is a downvaluation and it could affect your mortgage. The lender also needs to make sure that your home meets certain rules set out in your mortgage.
Step 8: Get your mortgage offer
This is when the lender agrees to give you the mortgage you asked for.
Step 9: Exchange contracts
Your solicitor and the seller’s solicitor will exchange your contracts. The only thing you need to do is sign yours. Both solicitors will also find a date when you get the keys to your new home. This is when the property is finally yours and is known as completion.
Step 10: Move into your new home
Pick up the keys and make yourself at home
HOW MUCH YOU CAN BORROW
How much mortgage can you get?
You can usually borrow around 4 to 5 times your salary. Lenders have different rules and the amount they times your income by depends on many things.
MORTGAGE COSTS
The cost of a mortgage includes monthly repayments, plus fees and charges from the lender. Some mortgage fees and charges include:
• early repayment charge
• arrangement fee or product fee
• booking, reservation or application fees
• valuation fee
• funds transfer fee
• deeds release, mortgage completion, redemption administration, discharge fees
• conveyancing fees
STAMP DUTY
Stamp duty is a land tax. How much you pay depends on how much you pay for your home and where it is. It’s often the second biggest cost of buying a home after your mortgage.
MORTGAGE TYPES & PRODUCTS
If you’re buying a property there are lots of different types of mortgages and products you can choose from. Common mortgage types include:
• fixed rate
• variable rate
• interest only
HOUSE DEPOSIT
A house deposit is the money you pay towards your home before you start paying the mortgage. It’s a percentage of the total house price and you usually have to pay at least 5% (typically 20%). It is possible to get a mortgage with no deposit.
MORTGAGE WITH ARREARS
If you fall behind paying your mortgage, talk to your lender. Your lender might let you:
• pay your mortgage for longer
• pay only the interest
• have a mortgage holiday
You could reduce your monthly payments so you can manage them by extending a 25 year mortgage to 30 years. If you extend your mortgage, you’ll pay more interest in the long term.
You may be able to switch to only pay the interest for a short amount of time. Most mortgages will ask you to pay both the interest and loan. This will also make your monthly payments lower. You’ll need to decide how to afford the payments when they go up again.
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