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Things To Consider Before Selecting A Mortgage Provider

Mortgage applicants often struggle to find a suitable high-street bank or building society for their mortgage application. Mortgage industry research indicates, that the main reason behind mortgage application declines, has been criteria breach by the applicants. Further, applicants end up with low loan amount affordability after the lender’s underwriting. 

The applicants could follow the below steps to avoid such issues,

  • Speak to an experienced mortgage adviser

Mortgage intermediaries help applicants to find a suitable lender after reviewing their circumstances. The mortgage advisers know how to find a suitable mortgage lender based on the information provided by the applicant. For example, a mortgage adviser would know the suitable lender for an applicant who works as a daily rate contractor. Lenders have specific criteria to assess such employment backgrounds. An individual applicant alone would find it difficult to find a suitable lender and mortgage adviser on their side would be an advantage.

  • Lender’s affordability

Mortgage providers consider applicants’ income and credit commitments to calculate the maximum loan amount affordability. The way each lender considers credit commitments is specific to them. For example, the credit card balance and monthly payment on a personal loan would affect the mortgage, in line with lenders’ affordability calculator. 

  • The interest rate and other product costs

The applicants would like to review the total interest cost they have to pay over the term of the mortgage. Also, there are related charges such as product fee, valuation fee, and application fee. Applicants find it difficult to understand whether to apply for 5 years fixed interest deal or 2 years fixed interest deal. The solution would be to run a cost comparison between the two options to figure out the cheapest option.

  • Evaluate the total cost of financing

Applicants need to consider the total interest cost of the mortgage and other costs. Most applicants solely focus on the interest cost over the fixed term of the mortgage. Some lenders charge low initial interest rate and add high product fees. Therefore, it is important that the applicants should consider the total cost of the mortgage. There could be several other charges such as valuation fee, completion fee, lender conveyancing charges and admin fees.

The other charges related to mortgage applications, differ from one lender to another. For example, Halifax charges a valuation fee for new home purchase applications. They provide free valuation for new re-mortgage applications. On the other hand, NatWest provide free valuation on both the residential home purchase and re-mortgage applications. Cost is not the only factor to be considered in the mortgage process. Applicants can understand the whole picture by speaking to an experienced mortgage adviser.  

  • Credit Score Check

Good credit history is a critical success factor in the UK mortgage application process. It doesn’t necessarily mean that applicants cannot apply for a mortgage with bad credit history. However, it is important to approach the suitable mortgage adviser and the lender. Most lenders in the UK would decline mortgage applications with bad credit. Therefore, applicants should connect with an experienced adviser to find a suitable lender.

Applicants find it difficult to apply for a mortgage due to low income and credit issues caused by the COVID-19 pandemic. When the income is affected, people struggle to maintain their monthly credit commitments and other committed expenditure. It becomes a nightmare to pay the mortgage along with other credit card bills.

Most fixed deal mortgages come with a product fee. Bad credit mortgage lenders charge higher fees compared to standard mortgage providers. Further, there could be application fees for bad credit mortgages. This is because the underwriting process and case assessment are complex due to the nature of the applicants.

When there is adverse credit, lenders are focused on assessing the full financial profile of the applicant. It could go up to the extent of analyzing each transaction or fund transfer on the applicants’ bank statements. Further lenders might ask for additional proof of income and a source of deposit for validation.

In conclusion, mortgage applicants should review their financial profile and assess personal circumstances with an experienced mortgage adviser to submit a successful mortgage application and buy their dream home.

As a mortgage is secured against your home, it could be repossessed if you do not keep up with the mortgage repayments.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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