Lending quote specifications and what they mean
If you are thinking about obtaining a mortgage, there are a few factors that you have to consider like your credit history, your current finances, and the value of the property to which you are applying it to. When you visit a bank or building society to seek out a mortgage quotation, you will be given a lending quote based on these factors. Here are some of the bases used by mortgage lending entities in assessing your mortgage application and final house quote.
The first thing that any lender will look at is your credit rating since it is a good indication of how you will be able to deal with your mortgage payments once they approve your mortgage price application. Likewise, the mortgage account officer assigned to you will use your credit history in providing you with a home loans quote and most, if not all, lending institutions have departments handling credit investigations. Their interest will be grounded mainly, but not limited to, existing loan obligations, the status of these loans, as well as deposit accounts and pending or resolved court cases, particularly those involving bankruptcy. As part of their credit checking, they will utilize some of the UK’s credit reference companies, like Equifax and Experian and a less than satisfactory rating will result in a higher bank quote on the mortgage rates. It will be useful for you to ensure your credit history is up to date and if there are any likely problems in it that will cause you higher repayments.
Sources of income
Another factor that lenders consider before issuing a quick mortgage quote is the source of repayment. They will ask you about your income if you are single, and if you are married they will have to consider the family gross income. If you own a business, you will be required to produce documents showing your total annual income for the past two years at least. If you are in an occupation, they will be interested in finding out whether you will safely continue to be engaged in it, to ensure that the mortgage payments will be made.
Lending institutions can also consider in their evaluation any income that you may realise in the future, like increases in your salary, as long as you can prove the certainty of expecting them. This will help you receive a more favorable qoute.
Loan to value
In the worst scenario, financial institutions consider foreclosure or repossession of mortgage assets as the last way out. They will tend to exhaust first all of the remedies available for them to collect their financial exposure because of the expenses involved in going through a repossession. However, if all efforts fail they will have to recover their losses, so in giving a first time buyer mortgage or remortgage quote, they also take into account the appraised value of the property to be mortgaged, its equity. The ideal situation to make the most of a home loan would be to ensure as much as possible that the loan to value (LTV) is as high as possible, ideally 100% or more. Since the recent economic problems and the resulting tightening up of only allowing high LTVs, we are now seeing some relaxing this to 90%. However, remember, you will be paying at a higher rate than at a 100% LTV. Having collateral, equity or funds to close this gap will save you money throughout the mortgage term.
Apply what you have learned above and request a quick mortgage quote online today.
This document does not constitute financial advice under the Financial Services and Markets Act 2000. If you require such advice, you should seek appropriate professional advice.