The basics of getting a mortgage
Whether you're just starting out on the property ladder by yourself or looking to perhaps buy a house with your partner, we've put together a guide on how to get a mortgage and buy that dream house.
When buying a house, there are many factors to take into account. You have to take into consideration budget, location, property type. In an industry that can potentially be prejudice towards gay people and gay couples, it is important to ensure you receive advice from the best, most impartial source. Our property section provides listings of gay friendly companies that can help you understand the legal jargon and answer any property questions you may have.
The majority of people require a mortgage when purchasing a property. The amount the bank will lend you depends on various factors. Below are the most common questions and answers regarding mortgages and buying a house.
How much can I borrow?
The amount that the bank will lend you in a mortgage depends on three factors:
- The amount you earn
- The value of the property you wish to purchase
- The amount the mortgage lender thinks you can afford
As a general rule of thumb, mortgage lenders will allow you to borrow between three and a half times and five times your annual salary. The exact amount will depend on your personal circumstances; for example if you have dependent children, your age etc.
Mortgage lenders will vary the percentage of the property's value that they are prepared to loan to you. The majority of lenders provide a mortgage of 75% of the property's value however other lenders may loan up to 95% or even 100%. The best advice is to shop around as offers can vary greatly.
Nowadays, mortgage lenders are becoming stricter in the way they ascertain a mortgage's suitability. Lenders will want to check your average outgoings such as household bills, dependent children, any debt that you may have incurred. You must be prepared to have documentation to hand that outlines your regular outgoings.
Q. Is it better to buy a house as a couple?
Buying a house as a couple provides the mortgage lender with further insurance that you will not falter on any repayments. The amount a lender would be willing to loan you will be much higher if you decide to buy a house as a couple.
The majority of mortgage lenders will be prepared to loan you two and a half times both your annual incomes.
Q. Do I need to put down a deposit on a house?
Yes. When buying a property you will have to firstly pay a down payment to the vendor. Once this is paid and the paperwork has been sorted out, you will have to the difference that remains between the property's purchase price and the amount the mortgage lender is willing to loan you.
Q. I am a first time buyer and I simply can't afford the deposit. What options are open to me?
If you are struggling to come up with the deposit for a house, there are other options available to you. Shared ownership schemes are generally provided to those who are buying a house for the first time. These schemes allow you to share ownership of the property with your local council or housing association. Rent and a mortgage is paid on the property. For more information on shared ownership schemes, contact your local authority or the Housing Corporation.
NOTE: Buying a house can be a stressful and extremely financially draining venture. It is important for you to shop around to see what offers and rates different mortgage lenders are offering. If you do not understand the process, make sure that you seek legal advice or you may end up paying for it in the future.