Value of Future Payments

Anyone who is responsible wants to make sure that their family are well looked after and buying a home is the first step to creating a good environment for you and your family to live in. Getting a mortgage can be a difficult and stressful period, yet once you have moved into your new home it can be too easy to forget how hard you have worked to get it. Then it can be easy to overlook the fact that your home could be taken away from you if you do not meet the repayments. Even the most well organised people can have things happen to them which they do not expect and this is where things can start to go wrong.

If you are the sole wage earner, or even if you share the monthly bills could your family cope without your wage for a protracted period of time, or forever? When things are going well for a family mortgage protection is often something that is put to one side, to “sort out another day” and unfortunately that day might not come until it is too late. Without mortgage protection, which is a form of insurance that will pay your mortgage in the vent of you not being able to through death, illness or redundancy you and your family could run the risk of being homeless. Mortgage lenders expect their repayments to be met and occasionally will allow a missed payment, but not several, and if this happens repossession proceedings can and will begin.

For anyone who doesn’t know about mortgage protection what follows is a run down of what is on offer and what you can expect if you take it out:

• Fully protected mortgage – this is the most comprehensive type of plan and will cover the mortgage holders for things like: their death, redundancy, critical illness, long term sickness and there will also be buildings insurance. Opting for this type of mortgage protection provides the most cover and is often what many people choose to take out as they like knowing that they are protected for many different events. It is more expensive than some of the other protection plans but without it you could lose your home if your repayments stop.

• Mortgage decreasing term assurance – this will pay out if the policy holder dies or contracts a critical illness during the term, however like a mortgage the amount of the payment will decrease as time goes on.

• Level term insurance – this plan will pay out a lump sum if the policy holder dies during the term. If the term passes without the death of the policy holder however the policy ends.

• Family income benefit – this pays a fixed monthly amount to the family of the deceased. It can help having a set amount coming into the house every month but as soon as the term of the policy is over the payments will end too.

• Mortgage payment protection insurance – this type of mortgage protection will pay out if the mortgage holder goes on long term sick. However there are terms and conditions attached to this and anyone considering it should go through these before they opt in to the plan.

There are different mortgage protection plans available but these are the most popular. Anyone looking into protecting their mortgage should speak to Go Direct who have trained advisors waiting to answer your questions. Remember mortgage protection might seem like an unnecessary expense but if you suddenly die or are unable to work how will your mortgage get paid? Without it you could loose your home if your life turns upside down.

A number of preliminary steps should be completed before beginning the application process for your new home mortgage.  Even if you have been a homeowner for years and are simply looking to upgrade your housing details, reviewing these factors BEFORE applying for a loan can be important, not only in the decision about whether or not to make the move, but in determining how much house you can afford and at what point you should decide to apply. While it is true that you cannot completely know the future of the housing market, being prepared to take advantage of whichever way the market goes will make you a much more savvy homebuyer.

Your credit history

Your credit history is an important part of determining your eligibility for a new home mortgage and for the amount of the loan you can obtain. The credit history is obtained from each of the three major credit reporting agencies, Equifax, Experian and TransUnion.  The lender may use only a shorthand form of the report, called a FICO score to determine whether you are eligible for a loan, and if so the interest rate you will be charged for the loan.  It’s important to make sure that your credit history is impeccable and that no negative or inaccurate items appear on the history.

Your documentation

When preparing for a new home mortgage, you can shave days or even weeks off your processing time by preparing your needed documentation in advance of the application.  Chances are that you will need current credit reports, bank statements, employer payroll check stubs and sometimes business income documentation as applicable. By preparing these documents and presenting them along with the application or upon demand, you will demonstrate that you are serious about the loan and that you understand the process.

Your financial future

When preparing to apply for a new home mortgage you need to take time to review your financial future.  Think about plans such as attending college, changing jobs or starting a business and how that will affect your ability to handle a mortgage. Wise planning and careful consideration of such elements should be done before ever going out and looking for the new house that you hope to fall in love with. Take into consideration current and projected income levels and the type of payment that you can reasonably handle.  If you plan to start a family, that will impact your ability to make large mortgage payments.

Your house

Although some would say that choosing the house is the most important step in obtaining a new home mortgage, in actuality, it should come well down the list of priorities.  The size and location and cost of the house should be determined based on how much house your preparation steps told you that you could afford.  Too often, potential home buyers go out looking for a home without a clear picture of what they want and what they can afford.  They see a nice home and rush into purchasing only to realize two years later that there is now way they can afford the house they are living in.  

Finding the best mortgage deal can seem daunting, complicated and lengthy at first. With hundreds of mortgage products on the market, each offering a different set of extras and incentives, it is can be difficult to know where to even start looking, let alone which product is the best for you. The temptation can be strong to take up the first reasonable mortgage quote that suits your current situation, without considering how that fits with your life plans. It might be in your interest, therefore, to give some serious thought to how your future might pan out, and then compare mortgages to find the best deal in the long run.

Choosing the right mortgage can mean that for the next two or three decades you will still be seeing the benefits; saving money on the terms that suit you. Choosing the wrong mortgage, however, can be disastrous, leading to the stress of losing money and the hassle of changing your mortgage or remortgaging. This is why the mortgage comparison process, either handled through a website or a mortgage broker, can be very useful for you, providing the security and peace of mind that your mortgage will not turn out to be a burden in 20 years’ time.

There are a wide range of different mortgage packages that might be more suitable for various situations, and each lender offers slightly different deals on each type of mortgage product. Using a mortgage comparison tool can help you find the most competitive mortgage quotes if you are, for example, self-employed, a first-time buyer, or have adverse credit, and feel as though all the mortgage products out there are unaffordable or will not fit into your lifestyle a little later down the line.

Getting the best quotes now makes life easier later

If, for example, you may need to alter your repayments due to a varying income, a flexible or lifestyle mortgage might be the best option. With one of these, you have the ability to take payment holidays when money is tight, and pay off larger amounts when you have better cash-flow. Or, perhaps, you are interested in buying a property that you will not be living in; with mortgage comparison, you can weigh up many buy-to-let mortgage products at the touch of a button. Maybe you work in a job that you know, in the future, will deliver hefty yearly bonuses; in this case, you could put those lump sums into an offset mortgage, reducing the balance of your mortgage. Or perhaps you might feel that you need longer than the standard 25 year length of a first-time mortgage, making your monthly repayments lower and so more affordable.

If any of these situations sounds like yours, you could use mortgage comparison services to find a whole range of quotes to work out which kind of mortgage, and then which lender, could leave you better off in the future, rather than behind with payments, or paying costs you could have avoided.