Proper shelter is one of the most basic human needs; yet, having a roof over your head is still considered a luxury for many people in this day and age. Wherever you are in the world, you can clearly see how real estate prices are continuously rising at a frightening rate, making it almost impossible for the majority of the public who are average income earners and young adults to own a place without needing a mortgage loan.
At first glance, a mortgage seems like the perfect solution, especially when everyone around you is taking one out. However, a mortgage is a loan after all; besides the risk of losing your home should you fail to repay it, you can face many other problems. Read on below to find out about some of the problems you might face with your mortgage and what you can do about them.
You Have Bad Credit
Just like any loan, your ability to secure a mortgage deal depends on your credit score. Banks or lending entities need to make sure that your financial status allows you to pay the installments and eventually repay the mortgage.
If you are in a bad place financially or have an unstable source of income, you will need to find a way around your bad credit. Otherwise, you will be seen as a high-risk borrower and will be offered an expensive mortgage with high monthly installments. A great piece of advice from ExpertMortgageAdvisor.co.uk is to hire a local financial advisor that can help you secure the right mortgage loan with your bad credit.
This will increase your chances of finding a lender that is willing to provide you with the mortgage considering the reasons behind your poor credit history be them defaults, latency in payments or bankruptcy. After your current financial situation is assessed, your advisor will find a number of lenders and proceed to discuss further details like the fees, and the mortgage terms.
You Are Applying With An Unsuitable Lender
Surveying lenders is a very important step when applying for a mortgage. Not all lenders are created equal; some will intentionally undervalue your property and will offer you only part of the mortgage you are applying for. They can also ask for huge deposits or expensive monthly installments that you can barely afford. The right lenders will take into consideration the type of property you are after— whether you are buying a family home or a student home will make a world of difference in how the property evaluation is done.
You need to find the right lender with experience in the type of mortgage you are after. Find different lending agencies and banks and ask them to prepare a mortgage simulation so you can have all the needed information to make an educated decision.
You Cannot Afford The Hefty Deposit
The bigger the deposit you pay to own a property, the better the mortgage loan you will be offered. By paying up front a big chunk of the price of the property you are interested in, you are lowering the risk that the lender has to shoulder. However, it is not always easy to secure a big enough deposit that lenders would deem worthy, especially when the property you are targeting is already above your budget.
Today, it has become easier to secure a mortgage with low deposits; yet, the rates will likely be more than you would want them to be. Still, it will be much more cost-efficient to bear the extra costs and invest in your own home than waste your savings paying for rent.
You can seek a government-backed mortgage which is usually more accommodating to smaller deposits. Another possible way around this problem is to seek a gifted-deposit from a family member. By signing a document stating that this family member understands the terms of the transactions and that they do not have the right to claim ownership of the property in question, lenders can then process your mortgage application.
You Need To Remortgage Your House
Many people find themselves in a situation where they need to remortgage their house in exchange for releasing some extra capital. You might be in a similar situation where you need the equity to do some necessary renovations. This can be a financially straining situation as your monthly installments can substantially increase.
Most financial advisors do not recommend using this method to acquire funds unless you can ensure that your property’s market value is increasing. If that is the case, you will be able to have your new lender pay your existing lender the outstanding mortgage balance as you get the difference as equity.
Mortgage deals are often complicated for average people to negotiate on their own. Especially when you face any of the above problems, it is recommended to find a trusted financial advisor to help you out of your predicament. Even though financial advisors’ fees can come as unnecessary to some people, the fact that your house could be at stake makes them completely worth it.
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