Mistakes to avoid when taking on a mortgage in the UK

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Buying your first property can be overwhelming even as it is exciting. It is easy to get lost in the whirlwind of it all and miss important steps that should ideally lead you to a stress free purchase. Here we outline the top 5 mistakes made when it comes to getting your first mortgage and how to avoid them.

1.  Not getting a mortgage agreement in principle (AIP)

A mortgage agreement principle or an AIP is a promise by a lender how much they are willing to let you borrow. This agreement can be used to determine how much you can afford so that you can start your property search at the price range that matches your financial strength. It also helps lenders to know that you are seriously interested in obtaining a mortgage.

An AIP can easily be obtained online or over the phone from the mortgage lender of your choice. To process an AIP your lender will need information such as your address for the past three years, income, credit history and regular expenses.

It is important to note that an AIP is not the same as getting an official mortgage offer which means there are no guarantees that the final mortgage offer will be the same amount as the AIP. Its only purpose is to get a lender to agree they should be able to provide you with funding as promised. Providing accurate and honest information is crucial when completing an AIP. Submitting "rough" figures or omitting credit agreements could lead to an misleading AIP decision.

2.  Overlooking important details

A step that is easily overlooked is checking on details before making your purchase. This points to the quality of the construction, the surrounding environment, the neighbourhood and what amenities are available in close proximity to the property. It’s easy to miss out on the nitty gritty especially if it is a property you like. A good tip is to make a list of everything you need to inspect before you visit the property. Some easy to miss details could be:

  • The safety of electrical sockets and if they are placed in easy to access locations.
  • Proper ventilation.
  • How good the lighting is in the day and at night.
  • The plumbing and water pressure.
  • The condition of the roof.
  • The placement and condition of fixtures.
  • Adequate space. If the space is enough to house your furniture and family.
  • If there is enough space in work areas such as the kitchen or office rooms.
  • Mould or wet patches on the walls. This could be bad for your health.
  • Adequate parking space.
  • Prone to flooding during certain periods of the year.
  • What kind of neighbourhood it is: whether it’s noisy, busy or unsafe.
  • How far away are the stores and transportation from the property.
3.  Ignoring additional costs

Apart from your deposit you also have other additional costs that go into buying a house. These include: moving costs, stamp duty fees, surveyor charges, solicitor charges and so on. Not factoring in these costs will leave you strung for money which is essential when dealing with a mortgage. You need to be aware of even negligible costs in order to prevent nasty surprises that could spring up.

4. Not being clear about your financial position

There’s a lot that goes into getting a mortgage and a lot to prepare for. The biggest challenge, of course, is having your finances in order. Before you begin your journey of buying a mortgage, it is wise to understand every financial aspect that is needed to secure your deal.

A major factor in this is your credit score. You need to make sure that your credit score is updated and clear of any restrictions. A poor score could lead to your application being rejected, and this can further reflect badly on your credit report. To check your score, contact one of these major credit reference agencies: *Experian, Equifax or TransUnion. To maintain a good credit score you need to ensure you have a viable debt-to-income ratio and that you pay your bills on time. It might be a good idea to refrain from making any large purchases on credit before you finalise your property purchase.

5.  Not researching on the available deals

Buyers may opt for getting their mortgage directly through their banks instead of researching for better deals. And this could lead to losing out on good deals available elsewhere in the market.

Mortgage deals differ from lender to lender depending on criteria such as discount points, fees, closing costs and interest rates. While it can be daunting to try to understand all the varying offers to find what’s suitable for you, it would be sensible to carry out some research before deciding on a deal. You could also get the services of a mortgage advisor. 

A mortgage advisor can provide you with access to competitive deals while considering your specific circumstances so that you can find the most suitable deal. At BVS Financial and Mortgaging Services, our professional mortgage advisors work with clients closely to match mortgages to what they can afford . Not only do you need to keep your personal affordability up to par but you also need to be aware of what a lender considers as an affordable property which your mortgage advisor can sort out for you.

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* Approved by the Openwork Partnership on 12-12-2023