Whenever you approach a lender to request a loan, you can expect a particular formula. Mortgages are a certain type of loan and they typically involve substantial amounts, are spread over a longer period, and are secured on your house. You can find thousands of different mortgages out there. However, it is possible to use these general rules to get an idea of what to expect when you apply for one.
Just how much can I borrow?
Providing you have a regular salary and have been employed for a certain time period – usually 6 months to a year – a lender is likely to offer a loan from three and a half times your yearly salary. This will be dependent on you providing a cash deposit (usually five or ten percent of the total quantity needed to purchase your home).
Specific professions, like doctors, are occasionally offered more than this (up to 5 times their salary), but this depends on other elements too.
How much will my repayments be?
Again, this depends on several different elements. The interest rate will affect the amount you pay every single month, as will the size of the deposit you’ll be able to offer and how much you’re borrowing. Some mortgages provide special rates for the first couple of years.
In the current economic climate and as a very general rule, you can expect to pay between 0.5% and 0.75% of the total cost of your home each month. This usually means for a mortgage of two hundred thousand dollars, your repayments might be around one-thousand to fifteen-hundred dollars each month.
Can I change my mind?
Many mortgages have a ‘tie-in’ period, meaning that you are bound to keep your mortgage for a certain period. You’ll typically be able to change lenders or pay off your mortgage if you choose to. However, you might find that you have to pay penalties. Typically speaking, it’s best to make sure you will be pleased sticking with your mortgage for a minimum of the next couple of years before you sign up.
When approaching a lender, be ready to give them info about your finances and employment. They’ll usually want to see proof. For example, bank statements and wage slips to verify your income. They will also probably want to know about what monetary commitments you currently have, such as outstanding loans.
If this loan does not work out for you, perhaps you need to try consulting an investment expert for more options. If you also own a company and are thinking about making it a public shell, look up: company go public or companies go public.