With the economic and social uncertainties of the last year, 2021 has left many wondering if now is the right time to begin looking for a new home. The conditions of the housing market in the greater London area requires home buyers to be proactive, not only in terms of searching for a home, but also in terms of financing.
One way to find out if you’re ready to own your own home is to use a mortgage calculator for estimating mortgage affordability based on income.
Whatever your budget and current needs, there’s a lot to think about beyond simply the cost of a new house. Before you make the big decision, consider these top seven tips for expediting the mortgage process:
1.Save for a larger deposit
Lyolds Banking Group eports that average first-time buyer deposits have increased by more than £10,000 in the last year. To assist with this difficult financial reality, the UK announced a new mortgage guarantee plan to help prospective buyers by lowering the minimum required deposit to 5%.
This cut will be only temporary, however, and should not be relied upon. Borrowers are looking for ways to make their savings go as far as possible. One such buyer is Harry Row, a 27-year-old who built up his £15,000 home deposit in a lifetime ISA. Saving for a bigger deposit can provide you with more mortgage loan options, including lower rates and more favorable terms.
2.Prepare your documentation
Collecting the necessary paperwork for a mortgage application is a tedious process, but doing so ahead of time will help you get the loan you are after. The documents that lenders request include bank statements, payslips, proof of income, ID, proof of nationality/residency, explanations for deposits, and more.
3.Provide accurate information
Mortgage applications require precision, as lenders need to confirm that all information is accurate. Simple mistakes such as misspellings, name variations, or not having your information updated will cause delays. You will also need to be sure you are disclosing all forms of credit so there are no surprises for your lender along the way.
4.Pay down your debt
Young, first time homebuyers make up half of all home purchases and are among the hardest hit financially by the Covid-19 pandemic, according to the Financial Times. This, coupled with the 3.1% increase in housing prices in the Greater London area, has made the process of getting a mortgage in 2021 an especially challenging feat. For all borrowers, paying down debt, improving their credit score, and closing out any open credits make for a stronger mortgage application.
5.Avoid major changes
The current uncertainty surrounding the housing market has many people debating whether they should buy now and take advantage of the government’s assistance in terms of its 95% mortgage scheme, or whether they should wait to buy in 2021. Regardless of when you buy, there are a few things to steer clear of, including large purchases, closing/opening accounts, and changing jobs.
6.Use a mortgage broker
According to a recent Bloomberg report, there is some concern that we are living through an unsustainable housing bubble caused by increasing demand and sky-rocketing home prices. Mortgage approval rates are up by one third since the start of the pandemic in early 2020. This increase has led many experts to worry as to whether lenders are easing requirements a bit too much.
With this being said, the advantage of working with a mortgage broker is that they recommend mortgages relevant to each borrower’s situation. A trusted, experienced broker can guarantee you the best possible rates based on your current assets and credit thanks to their access to major lending institutions. In short, having a broker enables you to get the best deals.
Getting a mortgage in the UK today requires you to do everything you can to strengthen your case. Don’t miss out on loan opportunities because you did not look around or were slow to respond to your lender’s requests.
The bottom line:
With memories of quarantine and stay-at-home orders still in the back of our minds, many are looking to settle into more comfortable housing. That dream may be closer than you think. By following these UK mortgage hunting tips, you can be prepared for a faster and smoother mortgage process.