Purchasing a house, or any other property for that matter, is one of the most frightening yet rewarding and potentially exciting experiences of your life, but like most things in life, things aren’t quite as black and white and as straightforward as you may have hoped. Before you even consider taking out a mortgage, it is absolutely essential that you take the time to familiarise yourself with as much knowledge and information about mortgages as you possibly can, as this will make your life so much easier in the long run. Whether buying your first home to live in, or purchasing a property with the intention of renting it out, knowing about mortgages is absolutely vital and with that in mind, here’s a look at a few surprising mortgage facts that you should know.
Are mortgage payments tax deductible? – A lot of property investors, even those that have been in the game for a long time, are unsure about whether or not their mortgage payments are tax deductible or not. To be honest, for people wondering are mortgage payments tax deductible, it all depends on how the money is being utilized in the first place. If you are using money to purchase investment properties, then the payment is indeed deductible, if it is for personal reasons however, I.E your own home, then no, the mortgage payments are not deductible.
No credit can be worse than poor credit – Some people believe that, when securing a mortgage, that it is beneficial for them to fly under the radar, as it were, and to keep a relatively low profile, when in reality, this is not the case. They think that no credit rating or history is going to be beneficial for them because surely it is better than poor history, but that is not the case at all. You see, the banks and lenders want and need to know as much about you as possible, in order for them to assess whether lending money to you is going to benefit them. A poor credit history shows they are/were bad with money, but if it shows signs of improving, at least the banks and lenders can see that they are trying to turn things around, and they can get an idea about the person. No credit history however, tells them absolutely nothing about you at all, so it is advised that you build up a strong credit history before you pursue your mortgage loan.
Different lenders charge different fees – Remember, just because one lender has quoted you as X amount of money for your mortgage and monthly repayments, this does not mean that another lender will quote the same amount of money. For this reason, it is recommended that you take the time to speak to different lenders and find out exactly who can offer you the best deals. The more you speak to, the better idea you will have about how much it is going to cost, and whom you should speak with.
You should get as many accurate credit scores as possible – When applying for a mortgage, the lenders will get your score from a number of reputable providers, and will then compare the results and go with an average figure. You should basically do the same before applying, and get as many results as possible, and then compare them to work out a rough average score. Some are free and some you will need to pay for, but rest assured that this won’t be much, and it will help to stop you speaking to your lenders blind, as it were, by having no idea what your credit score actually is.
The better your credit score, the better the deals – Obviously the better your credit scores are, the better your mortgage deals will be as a result. This is because the lenders will know that you are good with money, that you can be trusted, and that you are making enough to comfortably pay them back, plus interest.
The more deposit you put down, the less you pay – Generally you need to put down at least a 10% deposit before buying a property, so if you wanted to buy an £80,000 home, you would need at least £8,000 for the deposit. However, the higher the deposit, the less your mortgage repayments will be each month. So, if you can, the longer you can save for a deposit, the less you will pay each month.