How do you get a mortgage in 2020? Moreover, should you be getting a mortgage in 2020? Understandably, there's a lot of confusion and anxiety among prospective home owners this year, and this applies both to first-time buyers and those hoping to remortgage.
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Martin Lewis to the rescue: the Money Saving Expert's founder and campaigner for ordinary people's financial rights has recently shared his thoughts on what aspiring home owners should be focusing on right now, and what steps they should be taking to make sure they do get the mortgage if they've decided to go ahead and apply for one.
Lewis acknowledges that you'd need a 'crystal ball' to say for certain whether right now is a good time to be buying, but he has the following general advice to anyone who does feel that the timing is right: 'ensure the financials are sound, don't overstretch yourself, pick a budget and stick to it (even if that dream home is just a little bit more, stick to your budget). Buy a home you'd be happy to stay in for longer, as that's the best insurance possible.'
Once you've taken care of these basics, you'll need to think through the mortgage application. These top tips should help you get through the hurdles to getting one successfully.
1. Boost your deposit amount
By far the most important aspect of getting a mortgage in 2020 is putting together as much of a deposit pot as is possible. Remember that most lenders now are asking or at least 15 per cent of the total property value. While, according to Lewis, there's 'no shame' in asking friends and family for help, this might not be an option for everyone. There's another way to boost your deposit savings – by openings a Lifetime ISA:
'Anyone aged 18to 39 can open a LISA and get a 25% boost, worth up to £1,000/yr, on saving towards a first home that costs less than £450,000. The LISA must have been open a year to get the boost, so it's too late to do this if you're hoping to buy before the stamp duty cut ends next Apr - this is about buying longer-term. If you've already got a LISA, try to max out this year's allowance for the full bonus.'
2. Understand how lenders think
Lenders are especially nervous right now, because the longer-term prospects of the property market remain so uncertain. So, expect to be grilled on your finances – perhaps even small expenses such as eating out – and make sure your credit score is as good as can be. If either your spending habits or credit score isn't up to scratch right now, it's best to give yourself time to get back into financial good shape. Also bear in mind that lenders will need to be satisfied that you can still make mortgage repayments if interest rates suddenly rose to seven or eight per cent.
3. Speak to a broker
It's never been more important to seek specialist advice. Martin Lewis explains:
'It can be difficult to know which lender will accept you, which is why we suggest you use a broker. They can help cut through the complexity, particularly with the mortgage market in a state of flux, and give you access to extra deals not available to the public.'
We've teamed up with online mortgage broker Habito: use their free mortgage comparison tool below as the first step to getting specialist advice.