Applying for a Mortgage

A Home Buying Article Contributed by Katie Linstead

First Do Your Mortgage Research...

The first step before you apply for a mortgage is to do your research. Find out how much of a mortgage loan you can afford. There are many online mortgage calculators that can help you with this or you can visit an independent financial advisor or a financial advisor at your own bank.

The mortgage loan amount will usually be based on your income, existing credit commitments, the value of the home you wish to secure the loan on, and the amount of deposit you will be putting down on the home yourself. You will have to consider whether you can afford the mortgage repayments, and also what the final mortgage cost will be.

What Other Costs are Involved with a Mortgage?

When taking out your mortgage you will more than likely have an arrangement fee to pay to the bank, although they will often just add this amount to your mortgage. You will also have to pay for the bank's survey on the home, so that they can check that it is a good investment before giving you your loan. If you consult an independent financial advisor you may have to pay for their services, and likewise with any tradesmen you ask to give you quotes on any work you may want doing on your home.

As well as your actual mortgage related costs you will want to research life insurance and unemployment and illness protection incase you are unable to pay your mortgage due to these things. You must remember that a mortgage is secured on your home and if you cannot pay it your dependant and yourself will suffer.

If you wish your mortgage to go to someone other than your direct next of kin you will have to research drawing up a will so that the home is passed on in the event of your death (don't worry, as long as you have life insurance that covers the amount of your loan you will not be passing on mortgage payments to the person you bestow your home upon).

Does It Matter Which Mortgage Lender I Use?

Yes! Mortgages are a hugely competitive industry now and different lenders offer many different incentives. The main things you have to think about when choosing which of the mind-boggling array of lenders to apply to is whether you are looking for a mortgage that will serve you best for the short term or the long term.

If you want a mortgage that will serve you well in the short term then there is no use going for a mortgage that pays you out a cash back sum at the beginning if the redemption penalty after 5 years is even more. Similarly you might find that a mortgage that appears to offer nothing in terms of extras when you take it out will actually save you more money over the long term with capped or fixed interest rates than you would have gained with a join up offer.