If you’ve gotten to the point in your life where you’re considering getting a house, don’t let your excitement turn into carelessness. There are lots of pitfalls to be wary of, and if you’re not cautious you could end up in a difficult financial situation.
To prevent this, take some time to do some research on mortgages before you go shopping for one. It could save you time and effort later when you have to resolve mortgage-related issues you could have prevented. So what are some of the largest mortgage mistakes to avoid?
Going Directly to an Estate Agent
Estate agents seem like the perfect solution to how to buy your house. They can provide you with helpful information regarding the process, and they can appear to be giving you the best deals available.
The problem is that they are not independent sources. This means that they are under pressure to meet their targets, and the result is an interaction where their ultimate goal is to close a sale – possibly leading you into tricky financial situation.
If you only go to one or a couple of estate agents, you’re also not getting a sense of the overall housing market. The best approach for going down the estate agency route is to seek a wide range of opinions by visiting as many estate agencies as you can.
Alternatively, you could speak to an independent mortgage advisor who can give you unbiased details and information to find you the best deals.
Choosing a Variable Rate Mortgage
Choosing the type of mortgage that’s going to be best for you is another difficult task. If you’re a first time buyer, however, some good advice could be to stay away from variable rate mortgages.
Variable rate mortgages (as opposed to fixed rate mortgages) are those where the interest on your repayments can fluctuate. This can be to your advantage when times are good and the repayments are low. The problem comes when the housing market crashes and repayments sharply increase without you being prepared.
This is precisely what happened in the 2010 US housing market crash which led to the world recession, and according to the Guardian it might even be starting to happen again.
Taking Out Secured Loans to Make Your Repayments
Having unmanageable mortgage repayments could land you in even further trouble. To prevent this, you might turn to a long-term loan like a secured loan to help you pay them off.
However, this could be bad idea. They have extremely high interest rates, and one failed payment too many could result in you losing your house. Instead, the best thing you can do is ensure your mortgage repayments are manageable. A way you can do this is to add an imaginary sum of money onto the figure and see if it takes you over budget. If it does, take a lower repayment.
As you have seen, there are a lot of mortgage mistakes you can make, particularly when you’re a first-time buyer. Hopefully you’re now clued up with how to avoid the main pitfalls and can start mortgage shopping with more confidence.