The Mortgage Myth – You can secure one
A look at a newspaper or a listen to the daily news may give the impression that mortgages are as rare as hens’ teeth, but the truth is somewhat different. It is possible to get a mortgage, even in these days of financial crisis and house price gloom, but it remains to be said that certain criteria need to be met.
This has always been the case but has simply been amplified in the current market state, but if one has a long term job, a decent credit history and a sensible deposit a mortgage is on the cards.
The difference between now and ‘then’, the then being the period in which 100% mortgages were freely available, lies with the deposit. Some lenders demand as much as 15%, and this is where problems begin.
House prices, although falling, are still much higher than they were ten years ago. A 15% deposit now is considerably greater, therefore, than it was back then. As salaries have not risen in line with the price of property it is clear to all that putting together such a deposit is not a simple transaction.
The doom and gloom merchants have pointed to banks going under, and to a subsequent reduction in the number of mortgages available; this is undoubtedly so, as is the corresponding fact that fewer people are seeking home loans.
Less choice does not mean less chance for those who meet the criteria demanded as banks will still consider a safe deal. The lack of competition is one reason why very cheap mortgages are a thing of the past; lenders know that everyone is tightening their belts and the effect that a reduction in supply and demand has on the market.
A potential borrower with the required deposit and a clean history, plus guaranteed employment, will be welcomed with open arms by any lender. It will, however, be on their terms rather than with a sense of desperation.
Without the requisite history and deposit one should be prepared for a very difficult journey; it was lending to higher risk clients that brought the banks to the situation they are in now, after all.
All is not lost, however, as there are steps that can be taken to make life easier.
Experts recommend that the first step anyone should take when looking for a mortgage is to talk to their own bank. A customer with a lengthy record of banking at a particular institution will be known by the bank, and his or her credit history will be instantly verifiable. In addition, take the advice of an independent mortgage broker, as they have the ear of the lenders and the knowledge of the market place.
Interest rates are falling all the time at present as the government and the Bank of England do their best to shore up the economy, and this could be a good thing for potential borrowers. A mortgage broker will be aware of rate changes and the best deals, and will also have access to a wider range of available products than a bank.
Shopping around is still the name of the game in the home loans world, but the differences will likely be less than a couple of years ago.
It is far from difficult for the affluent to get a mortgage, and with prices set to tumble in the months to come this could be the right year to snap up a bargain.
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