Firstly, hearty congratulations to anyone reading this who can buy or has bought a home without a mortgage! You are one of the lucky few rather than the many. Most people, however are going to need the assistance of a mortgage to buy a home because pooling resources only gets you so far.
But how do you best go about finding the right mortgage for yourself and the person/s you intend to share buying a home with?
Share a Mortgage always recommends that you consult an independent mortgage broker. As it sounds, this kind of broker isn't tied to any particular lender's products meaning they have a greater range of mortgage products to pick from. And most often, they receive their remuneration from the lender themselves, not you.
Call 0333 344 3234 to get a free independent mortgage broker consultation.
Did You Know?
It's hard to be completely accurate about this but there are more than 3,000 mortgage products currently available according to some estimates.
In terms of the actual type of mortgage you go for, it depends on your individual circumstances. Here are just a few ideas about what's out there:
- Fixed rate mortgages offer you an interest rate fixed for a period of years (two is highly typical) after which the mortgage is charged at the bank's standard variable rate. The trick with these is to ensure that you get a new 'fix' at the end of the old one because the standard variable rate normally works out much more expensive. They normally have very expensive early repayment charges.
- Tracker mortgages are variable interest rate mortgage which track an underlying interest, such as the Bank of England base rate. They can be more expensive than a fixed rate mortgage during the fixed period, but there's no early repayment charge.
- Offset mortgages allow you to put the interest you receive on a savings account with the same lender towards paying off your mortgage.
- Helper mortgages allow someone helping you, like a family member, to sign over a fixed amount of cash for a period with the lender which is given back at the end of the period (and is at risk of being forfeited if you default on your mortgage).
- Guarantor mortgages work by a friend or family member guaranteeing that you'll make your mortgage repayments by putting an asset (normally their home) as collateral.
All of the above are subject to further differentiation. You can, for example, have a mortgage which takes into account that you're self-employed and there are Help to Buy mortgages which are specifically directed towards those who are also receiving an equity loan from the Government (effectively a mortgage in itself).
Prepare!
In order to make best use of our FREE mortgage broker consultation offer, you should do as much necessary homework as you can so you're prepared.
If you're completely 'at the start', please read our article on how to maximise your finances.
You should also examine our Home Buying Tools page which includes, for example, our highly popular mortgage affordability calculator.
If you're ready to think about mortgages you must, as the very first action, obtain a recent copy of your credit report. There's no point in applying for a mortgage if there's a high chance you will get rejected and it will hurt your credit score in turn. A good mortgage broker will warn you off this, but you should halt before you even reach this stage if your credit score needs work. You may even find that your credit file has mistakes on it that are hurting you but which can be rectified very quickly. Read our article on improving your credit score for some helpful hints.
You should also arrange things like 6 months' worth of bank statements, proof of ID and proof of address - all lenders will want to inspect these on any mortgage application.
Mortgage applications involve stringent checking of your finances and lifestyle by lenders, particularly since the 2014 Mortgage Market Rules. An independent mortgage broker is better able to help you select the right product for your needs in the first place and help you with your application. Additionally you'll then have less chance of targeting a mortgage product which you are highly likely to fail securing at the application stage.
