Lifestyle, Home & Beauty, Lotties Loves

The maze of getting a new mortgage

Dear Santa

This year I have to admit I have a rather large request on my Christmas list.  I am not sure if it’s something you can help with but if there is any Christmas magic left then it would certainly make my Christmas.  Could you find someone to buy my house…..

That’s a pretty big ask even for the big guy in red who is renowned for making dreams come true, but well after a year of my old marital home being on the market we head into Christmas with it still for sale.  Once it sells there will begin the whole house hunting and mortgage maze and with recent changes to lending and mortgage guidelines it has become increasingly difficult to find a lender who would be willing to bridge the gap and help me find what will technically be ‘my’ first house on the property ladder.

The whole thought of house hunting and getting a mortgage scares me witless.  It seems really grown up and falls into that bracket of adult things like pensions and life insurance.  There is no doubt that buying a home is one of the most stressful things you can do.  I’ve moved home lots as a child and twice when I was married and along with juggling all the timescales and to-do lists it really does put your organisational skills to the test.

finding a new mortgage deal

There are though a few things you can do to help the moving house and the finding a new mortgage process go a little smoother and your stress levels on an even keel.

It is worth remembering that a typical house move can take anything up to 8 months.  From researching the area you want to move to once you have sold, to phoning around estate agents for viewings and appraisals on your own property in the early days it can feel very much like you’re treading water with little progress. Once an offer comes in it is important to get focused and make sure you are clear as to what is your selling price and what additional extras you can negotiate outside of the sale; this is the time to get rid of Aunty Mabel’s hideous floral curtains or raise an additional bit of cash through selling fixtures and fittings you don’t need going forward.

At this point hopefully your solicitor is doing all the necessary paperwork and on the house you are buying carrying out surveys ready for exchange of contracts.

Once this is done you cannot back out of the sale so it is important to make sure you have done all the financial checks possible to ensure you can afford the property going forward.  This may well mean borrowing additional cash in the form of a mortgage and it is worth looking at a number of mortgage deals at both your existing bank or lender or approaching a new bank to help you make that step up in the property ladder.  Many of the high street banks have handy repayment calculators on their websites so you can see what your financial commitments will be once you have an agreement in principle as to the amount your lender is prepared to offer you.  It is worth noting that an agreement in principle (AIP) is usually only valid for 30 or 90 days once received, depending on the lender so if your new mortgage search took a while, it might have expired and you should make sure you get a new one.

If you have a good credit history then it is likely your bank will offer you a highly favourable rate or deal on a new mortgage and it is important that you ask for a personalised mortgage illustration.  It’ll detail all the key features of the mortgage. You’ll need this later on so make sure you scan it, keep it and file it.

Choosing to move is a huge financial decision and it is vital that you have looked at all the options available to you from fixed mortgages over a set period of time where your repayments each month stay the same right through to tracker mortgages where your mortgage rate will move in line with the Bank of England base rate  (meaning your payments can go up and down).  Both offer attractive options for new and first time buyers and for me personally I have always locked in to at least a 2 year fixed mortgage because I like the certainty and security of having fixed payments.  Once you have found your mortgage double check all your calculations as you may want to borrow a little more to cover that all important DIY you’ll no doubt have to do when you move in and maybe buy a few pieces of furniture; typically additional borrowing on your mortgage is cheaper than taking a personal loan so if you can afford to take a little extra and your lender approves this may be the time to do.

When you are ready to finalise your mortgage contact your lender to proceed.  It is worth noting there is usually an arrangement fee payable at this point to set up the mortgage.  This can be anything up to £2,000 and you can either pay this separately or choose to roll it onto your mortgage repayments.  If you do the latter is worth remembering that you will pay interest on that fee for the length of the mortgage.

The time period from exchange of contracts is usually 4 weeks but can be done quicker by arrangement and the mortgage funds are usually sent by telegraphic transfer direct to solicitors to avoid online banking headaches!  Solicitors will hold the money on account and use the proceeds of sale and mortgage moneys to discharge their fees on account and pay stamp duty on the property, and it is usually the responsibility of the seller to pay their estate agents fees on completion which in my case are 1.5% but can be up to 3%.

Ultimately buying and selling a house and arranging a mortgage is all about organisation and research.  The more organised you and the more in depth research you undertake the better deal you will walk away with to fund your dream home purchase.

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