How Can I Get Approved For a Mortgage? With Felicity Holloway
How Can I Get Approved For a Mortgage? With Felicity Holloway
☎️ In today’s episode, I speak to Felicity Holloway, Senior Manager of Mortgage Operations at Moneybox, about the best way to secure a mortgage.
💸 If you’re dreaming of homeownership but have no idea where to begin – especially considering the current cost of living crisis – you aren’t alone. Today’s episode will outline all the ways in which you can boost your chances of buying that dream home.
💥 Today on The Wallet:
1️⃣ Understand how much you need to be saving for a house deposit, and how to do so in the current economic climate.
2️⃣ Find out how inflation impacts your mortgage.
3️⃣ Tips on reducing stress when looking to buy a home.
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You can listen (20 min) and subscribe here:
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saving for a deposit
“I think knowledge is really power, and the more you know about what’s likely to happen throughout the process, I think the less stressed you will be.”
To start with, ask yourself if your credit score look good. You can check your score online — something to do early in the process, because then you will know exactly what to expect from that perspective.
Other things to consider: are there any quirks in your income that you need to address with your mortgage broker before you even start looking? Do you understand a bit about how the legal or conveyancing process works, why you need a solicitor and what they're going to do for you?
Take the time to figure out if you will want to carry out a survey or evaluation when you find a home in order to look at the property's condition.
It is also really important to work you early on exactly how much you need to save so that you can set some very clear goals that you feel are attainable, and also make sure you know about the fees involved.
When it comes to how much you can borrow, it depends on your individual circumstances, and it's different for every mortgage lender. Normally, they will take into account your annual income from employment or self-employment, and then take off any regular outgoings, such as loan repayments, credit card balances and childcare. I think if you're looking for a rough estimate, if you're early on in the process, you can use an online mortgage calculator or a mortgage in principle, which takes a bit more detail into consideration.
It’s helpful to do all this early on so that you can really start to have that number in mind, not look at properties that are out of your reach because there's nothing worse than getting emotionally attached to a property that you can't afford!
The minimum deposit that you need to save for a mortgage in the UK is 5% of the value of the property, although the more deposit you have in general, the lower the interest rate is going to be — which means lower monthly payments.
It can be sometimes slightly easier to get a mortgage if you have a higher deposit, because from a lender's perspective, you've saved more, which means you’re a better bet.
It is also important to find yourself a really good broker — someone who's got plenty of experience. They have access to as many lenders on the market as possible, and most importantly, make sure it’s someone that you feel very comfortable with.
reducing homebuying stress
When you choose a broker, try to find one that has case managers. They will help you deal with the administrative tasks (there will be a lot of them!).
Case managers will join you once your mortgage application is submitted: they'll chase the lender to get the offer issued for you as soon as possible and if the lender asks for any extra information, they'll get it for you and upload it to the portal.
Once your offer is issued, there's actually quite a lot of work. A lot of first time buyers don't know that goes into that next stage, where the solicitors do all the searches and inquiries on the property to make sure that the deeds are intact. The case manager would chase that through, make sure that the solicitor gets that done quickly for you, they push for an exchange date and a completion date, and ultimately get you into the property as soon as possible.
Inflation and your mortgage
Mortgages do become more expensive as the interest rate goes up. It becomes as more costly to borrow and demand could increase, which means house prices could drop. However, there doesn't seem to be any impact on the values of property right now.
There have been a couple of bank and base rate rises, which has obviously had a knock on effect for mortgage rates: once the base rate goes up, we do see a rise in interest rates from the lenders, but then it usually tends to even out.
When we take the cost of living crisis into account, yes, it might be slightly harder to get a mortgage because lenders will need to take into account things like food and fuel prices going up. But in the long term, for first time buyers, that's probably a good thing because it means that people aren't going to be lent money out for mortgages that they can't afford to pay back — which means it's responsible lending.
Whether or not now is the right time to buy is up to you — as it stands, the property prices don't seem to have been negatively impacted by the current cost of living price crisis.
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