Knowing All of Your Mortgage Options When Searching for a New Home

The process of gaining a mortgage is something that every homeowner will usually have to go through. They are long-term loans that you could be tied into for up to 30 years.

They can be complicated to understand fully, but it is vital that you do comprehend the intricacies of any mortgage you sign up to.

You’ll need to give yourself the knowledge that will empower you to make the right decision about choosing a mortgage. Mint Equity mortgage broker Central Coast homeowners go to has put together a list of common mortgage questions, and some of their answers, to help give you a better understanding.

What Are the Criteria for Getting a Home Loan?

The first step to understanding mortgages is knowing whether you qualify for one. As we stated above, you’ll be tied into your mortgage for the next three decades, or thereabouts, so it is important that you sign up to it knowing fully well what you’re getting yourself into. This includes knowing how exactly you’ll meet the criteria for obtaining a mortgage.

Your bank manager will need to know the following kinds of information, to see if you qualify for a mortgage:

• Your place of employment
• Your income
• Any outstanding debt
• Any accrued assets
• How much of a cash instalment you’re willing to provide upfront for the purchase of your home

Naturally, your bank will need to know how much your home costs, they can then do calculations to see how much the monthly payment will be, including the interest, and see whether you’re able to make the repayments currently, and they’ll need to estimate the likelihood of you being able to continue making the payments throughout the future.

What Are Your Options?

Any good lender will be careful to explain to you all of your mortgage options before letting you agree to anything, but it doesn’t hurt to do your own homework beforehand. One thing you’ll need to know is that it is common for lenders to approve more money than is needed, so bear it in mind that just because you qualify for a big loan doesn’t necessarily mean you need it. Can you even fully afford it?

Definitely, always make sure you understand all the intricacies of signing up to a home loan before you sign up to anything. Otherwise, you may end up losing your home.

How Much Can You Really Afford?

Before you start looking for homes, you’ll need to work out a budget, and this will determine the location and size of home you’ll be buying. Then you’ll be applying for a mortgage based on that.

We recommend a mortgage instalment that is no more than a quarter of your monthly take-home pay. So, you must factor in taxes first before you can see how much of your salary you can commit to a monthly home loan payment. You should only look to contribute around 25% of your actual monthly income towards your mortgage. Otherwise, it may be too much for you to afford.

In your budget planning, you should always allow some room for movement, in case you have emergency payments or other outgoings that you haven’t accounted for. Also, don’t forget that your circumstances may change in the future – in which case you may need to renegotiate your loan payments. But until that happens, you should try and stick to the 25% rule.

When applying for a new mortgage for your new home, always make sure you can afford it, know all your options, and understand the criteria that are required.