Dos and don'ts of taking out a mortgage

For the majority of people, the journey of buying a home first begins with the daunting task of securing a mortgage. Regardless of whether you’re a first-time homebuyer or a seasoned property investor, the mortgage application process can be complex and challenging to navigate. But it doesn’t have to be. Which is why this month, we’re helping you along the way by sharing five dos and five don’ts to keep in mind when applying for your mortgage.

1. Check your credit score: Understanding your creditworthiness is essential before beginning your home search. Monitor your credit score regularly and take steps to improve it if necessary.
2. Gather necessary documents: Compile all required documentation, including identification, proof of income, bank statements, and deposit proof, to expedite the application process and prevent delays.
3. Communicate honestly with your broker: Establish open communication with your mortgage broker to ensure a smooth application process. Be transparent about your financial situation and any changes that may occur during the process.
4. Get pre-approved: Obtain pre-approval for a mortgage before house hunting to strengthen your offer and gain insight into your borrowing capacity. Pre-approval demonstrates your seriousness as a buyer and gives you an advantage in competitive markets.
5. Plan for the future: Consider your long-term goals, career prospects, family plans, and potential lifestyle changes when selecting a home and mortgage. Ensure that your choices align with your future aspirations and provide flexibility as circumstances evolve.

Don'ts:

1. Don’t make assumptions about your position: Mortgage lending criteria can vary greatly between lenders, so don't assume you're ineligible for a mortgage without consulting a broker who can provide tailored advice.
2. Don’t offer on a property without a Decision in Principle (DiP): Having a DiP in place strengthens your offer and provides reassurance to estate agents and sellers. Without it, your offer may hold less weight, and you risk disappointment if your financial calculations aren't accurate.
3. Don’t bury your head: If your current financial situation isn't favourable for obtaining a mortgage, don't give up on your homeownership dreams. Instead, speak to a broker who can help you understand your options and create a forward plan to improve your circumstances.
4. Don’t be afraid to ask: Understanding the details of your mortgage product, loan, and the application process is crucial. Don't hesitate to ask your broker for clarification on any terms or concepts you don't understand. It's essential to feel comfortable and informed about such a significant financial commitment.
5. Don’t fall for conditional selling: You're not obligated to use the broker referred by the estate agent for your mortgage application. Be aware of improper selling tactics that pressure you into using a specific broker. You have the right to choose your own broker, and your offer doesn't depend on using the estate agent's recommended broker.