Nine common mortgage mistakes and how to avoid them
Whether you're a first-time buyer or a seasoned home mover, mortgage missteps can happen during the mortgage process even if you're careful.
Being prepared for some of the more common issues can make it easier to plan around them or devise a strategy to avoid them. They may even save you a small fortune and speed up the buying process!
Please take a look at our nine common mortgage mistakes.
1) Not getting a decision in principle before starting your property search
Getting a decision in principle in advance will give you an idea of how much you can borrow, the rate, and whether you qualify for a mortgage. This allows you to narrow down the options for what sort of property you can buy and ensure you can purchase a property you have agreed to buy.
2) Not reviewing your credit report early enough
A blip or error on your credit report can seriously hinder your chance of getting a mortgage, so it's a good idea to check it early and do what you can to improve it.
Do not underestimate the power some companies have over your credit report. A missed payment or two could mean you don’t qualify for the cheapest deals and have to apply to one of the adverse credit lenders.
3) Failing to budget for all costs involved
Ensure you’ve accounted for all the costs, such as conveyancing, surveys, lender fees, and stamp duty land tax. Lease extensions or council tax costs should also be considered.
Determine how much it will cost to improve or refurbish the property you want if it needs work.
4) Submitting incomplete or providing inaccurate information to the lender/broker
One of the biggest mistakes is thinking that a lender or a broker will not determine whether applicants have financial issues. Missed payments, undisclosed debts or costs, or upcoming job changes often come to light during the application process.
Trinity Financial’s brokers want to fully understand your finances to help you get the most suitable deal. This is part of the reason they prefer a 15-minute phone or Zoom consultation rather than an email conversation. Click here to book a call with one of our experts.
5) Not searching the market for the lowest rate and most generous loan size
There is a lot of competition in the mortgage industry, and many different lenders offer the lowest rates and fees depending on the size of your deposit and credit score. Some mortgage lenders also issue more generous loan sizes than others.
Hiring a professional to assess the mortgage market often pays so you get the most appropriate lender and rates.
6) Keep an eye on your rate
Many mortgage lenders allow borrowers to switch mortgage rates even when the mortgage offer has been produced. Mortgage offers tend to last between four and six months, and rates can change once or twice a week with some lenders.
At the very least, check that you are getting the best deal with the chosen lender a few weeks before completion. If you do not check the rate, you may well pay significantly more every month for the term of your fixed or tracker rate.
Swapping rates too close to the exchange of contracts can also be risky. Some lenders run new credit checks once a mortgage offer is issued, meaning if your financial situation has changed, your mortgage offer could be withdrawn.
7) Think twice before skipping the home inspection
Skipping a home inspection might save money in the short term, but it may cause significant headaches and additional costs in the long term.
Mortgage lenders often provide free property valuations to ensure a property is suitable mortgage security. However, the lender does not always disclose or know about issues like damp, structural movement, Japanese knotweed, or electrical or structural issues.
If you pay for a home buyer's survey that highlights the property's need for work, you could try to renegotiate the purchase price.
8) Opting for the wrong mortgage rate and read the mortgage offer
Get advice and work out if you need a two-, three- or five-year fix or a tracker rate. There are also offset mortgages available.
Signing up for a longer-term fixed rate when you do not plan to stay in the property for long isn’t advisable because of the early repayment charges, but not everyone reads the mortgage offer to understand the small print.
Try not to take out more finance once your offer is produced because a lender runs another credit check before you draw down the mortgage. If you have more debt or a missed credit card or loan payment, it is likely be flagged and may cause issues.
9) Choose a good solicitor/property conveyancer
The cheapest is not always the best. Make sure you do your research and choose a good property conveyancer. The legal part of the home-buying process can be very complex and time-consuming.
Finding a legal expert to help you buy a property is essential, particularly if you have a complex situation, are in a hurry to complete the purchase, or are buying an unusual property. Trinity Financial's brokers have worked with Steph Lyke for 20+ years.
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation
The information contained within was correct at the time of publication but is subject to change.
Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage
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