If you have finally decided to go for the property of your dreams, the next steps are crucial. And the very first step after your major decision is often to apply for a mortgage. If you apply for a mortgage and it is approved, you are tied to this mortgage for a long time. So every step of the mortgage process needs to be carefully assessed and decided, and this includes knowing what you can get and if you should get it as well.
How much can you get?
The amount you may be able to acquire will usually be based on your income as well as your deposit. First, you have to know exactly how much you earn. Next, you have to come up with a good amount for a deposit, because the higher the deposit you can put down, the better your mortgage deal will be.
But if you want to know how much you may be able to get, you need to make an assessment of your significant expenses, such as school expenses, childcare fees, repayments for debts, car expenses, and the like, and then subtract the repayment amount that a lender may be offering you. However, keep in mind that at best, you can only get a rough estimate. You will not really be able to get a precise figure until you actually apply for the mortgage itself. One person who can give you a better gauge on the amount you can get, however, is a mortgage broker. Try consulting with a mortgage broker (such as the experienced mortgage brokers in Colchester from Flagstone) so you can, in turn, have a better idea of what you can expect in regards to the amount of the mortgage you can receive.
Once you have a good idea of the amount you can expect, you can try to acquire an AIP, or agreement in principle. This is simply a sort of ‘mini’ application where you are asked about certain personal data and information and the lender does a credit check on you just to see if they would be agreeable to accepting your mortgage application (which is still, of course, subject to additional checking and confirmation). With the AIP, you should be able to know how much you can actually borrow. And if the lender approves your AIP, then this is a good sign indeed – it means that they have assessed you and done a credit check on you and, in general, you are someone they may be able to approve for a mortgage deal in the future.
The merits of staying within your means
If you do get approved for a mortgage, you should also carefully consider how much you can safely and comfortably borrow without going overboard. Before you even look for the right house, you should set a clear budget as to how much you can really afford to pay back. Needless to say, if you get approved and the lender is open to letting you borrow as much as you reasonably can, it would be quite easy to become tempted to increase the size of your loan as well. But this is really where you have to be doubly careful and stick to your original plan of repayment. Use an online tool for budget planning, if you want, so you can figure out exactly how much you can repay. If the tool tells you that you cannot afford a particular piece of property, then chances are it is right. Don’t even try looking at properties that are even just a fraction more than your budget – it’s simply a waste of time. Rather, stick to what you have in your budget and stay firm on what you can afford.