Here are a few tips on how _not_ to get a mortgage, and underneath each one, the smart thing to do instead.
1. Don’t haggle.
A mortgage or a house is just another consumer product. A few clever words can get a sweeter deal. So haggle!
2. Buy in high-season, when everyone else is.
Buy off-season, usually November, December. You may be able to wangle a ‘seasonal discount’. Sales are slow, so mortgage companies and real estate agents will offer better deals.
3. Don’t look at the small print.
Companies may offer very low rates upfront, but hide additional costs in the small print. Beware of prepayment penalties.
4. Go for a long term.
Try to keep the term of the mortgage as short as possible. The shorter the term the less you pay in interest. Consider a fifteen or twenty year term.
5. Buy the most expensive property you can (barely) afford.
Resist the urge to splurge. Some lenders will offer up to six times your salary. They’re not doing you a favour. Get the minimum the missus will be happy with. Divorces can be triggered by loan defaults.
6. Ignore your credit rating.
Improve your credit rating as much as you can. Pay off old loans, and once they’re paid off, check your credit report.
6a. An easy way to build up your credit score is a department store credit card; make a few charges on it, and pay them off ASAP. The idea is to get positive entries on your credit report.
6b. Ensure you pay all your bills on time (or before time); never later than the due date. Pay off credit cards and keep their balances low.
6c. Close unneeded credit card accounts. Close them off _slowly_, not all at once. Keep only two credit cards. These should include your oldest card, as that has the longest credit history.
6d. Open a savings account at your bank.
7. Focus on the APR.
Don’t get too caught up in comparing APRs and various special offers; they may not reflect what _you_ will get if you apply. Everything depends on your own financial circumstances.
8. Go with the first flashy company you find.
Something to look out for in any mortgage company is how old it is. Is it newly formed, or has it been around for thirty years?
9. Buy a house on a whim.
Get a full, professional survey of the property. Find out the true value of your home. Get more than one independent appraisal. A survey costs a few hundred quid, versus the hundreds of thousands a house can cost.
10. Ignore your outgoings.
Write up a budget of your monthly expenses; factor in daily, weekly, monthly and yearly outgoings. See how much you can truly afford to put towards repayments.
11. Rush to take the time-limited-one-time-only-discount-special-offer.
The deal that seems too good to be true probably is. Avoid jumping straight into what could be the biggest purchase of your life. Check it out first.