A reader wants to know whether he should organise a mortgage now – or wait for interest rates to drop.
Tony Davis, myfinances.co.uk mortgage expert from Mortgage Meadow, takes him through the problem and what it means to his finances.
I have a big deposit (£25K) and started looking at buying. No rush with house prices going down, but do I find house first or get mortgage deal first?
If I get a mortgage first and interest rates go down, can I switch?
Always see what you can borrow before you start deciding what you can buy.
By meeting with a whole of market mortgage advisor you will get an understanding of what you could borrow and the terms that it would be lent to you.
You can go a stage further by then obtaining an agreement in principle from one of the mortgage companies recommended.
An agreement in principle is a lending decision made upon the key facts of your circumstances and will generally include a credit score and a credit search.
A credit score is an electronic decisioning system that compares your details against a given lenders customer profile, if you meet the match the profile you have agreement, exceed it and they might offer you better terms, score lower and you will not be approved by that company.
Part of the credit scoring will include a credit search, this looks at your credit history registered with one or several of the credit agencies. When a credit search is undertaken it is recorded on your credit file and too many credit searches can impede your credit rating.
You should only make your full mortgage application at the time you have found the property you want to buy.
It is possible to reserve funds with some lenders and some products, however, they are not held indefinitely and you can be charges to book the money, so unless you are very close to agreeing a purchase there is little value in doing so.
If you have a question for Tony, go to the myfinances.co.uk Ask the Mortgage Expert section.
Or for more information or mortgage advice go to Mortgage Meadow.
Mortgage Meadow is an independent mortgage broker and is authorised and regulated by the Financial Services Authority
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