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It may seem backwards to shop for a mortgage before you shop for the house, but there are several reasons for doing this. First, you’ll find out how much you can borrow, which is totally dependent on the price house that you choose. Be careful not to allow the lender to convince you into a monthly payment that you are not comfortable with. There are no “rules” here, however most mortgage companies will lend you an amount which will allow you to pay a mortgage of approximately 33% of your current salary.
TIPS:
Shop around for the best mortgage rate. Shopping for a mortgage will also help if you can get “pre-approved” for the amount you’d like to borrow. This means the lender has looked over your credit and financial statement and agreed to lend you the money. Sellers like pre-approved buyers because there’s less risk the deal won’t go through. You can find a list of licensed mortgage institutions/Building Societies on Dewdrop’s website.
If you are not yet ready to buy, start saving with your building society. The longer and the more you save towards your deposit with your building society, the lower your mortgage rate.
Some employers have staff mortgages schemes at preferential rates available to employees. Be sure to check with your Human Resources Department to see if your are eligible for a staff mortgage.
Be sure to make contact with the office of the National Housing Trust (NHT) to see if you are eligible for a mortgage. The rate offered is normally lower than that of your traditional mortgage institution. You can combine this mortgage with that from your building society.
Go for the shortest payment period. The difference in payment between a 20 year and a 30 year mortgage payment is sometimes not significant to the extent of which it affects your qualification. You can also repay your mortgage faster. Ask your mortgage provider to calculate mortgage payments for 15, 20, 25 and 30 years. Make a decision for the time period that suits you.
Do your best to avoid adjustable rate mortgages. If you take a mortgage when interest rate is low, when interest rate rise, you will end up with a higher mortgage payment which maybe outside of your budget
It’s okay to be a little stretched, at least at first. Most people “grow into” their mortgage payments over time.
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