Mortgage lender
There is no denying the fact that for most individuals, a house is the most expensive acquisition that a person makes in his lifetime. As a matter of fact, more often than not the house is purchased on money borrowed from professional lenders. Thats why, it is therefore imperative to know exactly what one is in for when one is getting their first mortgage.
In broader terms, the mortgage lender lends you the money that you require for your house and expects you to pay back the same within a specified time along with interest. Theoretically speaking, there are two basic types of players in the mortgage market: lenders and brokers. According to experts, you have the option of going directly to an authorized lender, or you could approach a mortgage broker who helps you obtain the mortgage from any of the several lenders in the market. It is worth mentioning in this regard that it is a jungle out there and it might be helpful to have someone who can help you navigate in it. But always remember that the fee that the mortgage broker charges may be higher than what the authorized money lenders charges. Moreover, also be aware of the fact that most of these brokers are not licensed and hence are not bound by any regulation.
What do mortgage lenders look for
If experts are to be believed, mortgage lenders are mainly concerned about your credit report. As a matter of fact, in a credit report they scrutinize your debt ratio which is an indicator of your earnings and how much you owe, as well as over all credit rating. On the other hand, proof of earnings is another key criterion to decide whether the lender will finally approve your loan amount or not. Fact remains that this information is generally obtained from tax returns and pay stubs submitted by you. Theoretically speaking, in order to get the mortgage without much hassle, it is important to keep your records clean and unquestionable. The question now arises: But what if you have a not so perfect credit report Well in that scenario there are several other lenders who can still give you a loan, by charging you a higher rate of interest.
Why do mortgage lenders sometimes turn down mortgage request
This may be because of the factors such as bad credit report, low annual income or even when they are not satisfied with the house that you plan to buy.
How much of a mortgage loan can you reasonably expect from these lenders
A kind of thumb rule clearly pinpoints that you can get a loan amount that is 4-5 times your annual income. Therefore, so the more you earn, the bigger the mortgage you are eligible for.
What is the process of obtaining a mortgage
According to experts, you can either approach the lender to get a fair assessment of your situation and ask them how much they are willing to give you, and then look for a house in that budget. On the other hand, you can even select a house and then apply to the lender for payment. Whichever way you chooses, its quite mandatory that you have to first obtain an Agreement in Principle which states the amount the lender is willing to pay for your house. In theory, this document is valid generally for a period of 3 months or so. After this time period you are expected to complete the Mortgage Application and submit the same with required documents pertaining to your financial stability and creditworthiness. Them comes the next step of inspection of the house by a qualified valuer.
After your mortgage application is found to be up to the mark, the lender will issue a Mortgage Offer, or an Offer of Advance. This document will also emphasize the conditions on which the lender is offering you the mortgage.
What are the fees associated with mortgage application process
It is worth pointing that one is generally required to pay an Administration or Application fee for setting up the mortgage. Furthermore, a separate Valuation Fee may sometimes also be charged.
Theoretically speaking, walk into any high street bank or building society and mention that youre looking for a mortgage, and youre likely to be bombarded with leaflets, if not hurried into a private office to meet their mortgage advisor.
Always remember that mortgages are big business and every large financial institution will offer several types of loan for buying property. Therefore, its a good idea to check out as many different lenders as possible before making a decision experts always keep repeating the phrase shop around like a mantra these days and you could save yourself a lot of money by comparing whats on offer.
It is worth mentioning in this regard that your own bank may be a good place to start if youve banked with them for a while and have a good financial record they may be more confident about loaning you a large amount of money such as a mortgage. Though you have relatively low interest rates and a booming market, these days the competition among lenders is fierce and you may find a better deal elsewhere. According to experts, dont feel that you have to use the same bank for your mortgage as for your personal account.
There are innumerable websites that produce tables of comparative mortgage offers just type mortgage into your search engine and see the amount of results you pull up. On the other hand, Which, the magazine of the Consumers Association, is a reliable source of information on the current market You can take a look at their website for guides on Which mortgage at www.which.co.uk
Moreover, the financial sections in newspapers carry adverts as well as news on the latest deals beware though of being seduced by adverts promising low rates without giving all the details theres more to finding the right mortgage than just picking the best rate. Always remember that the banks are likely to advertise their lowest rate, and you are likely to have to meet certain criteria before qualifying for that particular deal. Thats why, check for things like hidden clauses or Higher Lending Charges these are one-off charges that applied to some deals which are supposedly to cover insurance protection for the bank when they lend to you. They will not, though, offer the lender with any security!
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