How to Get A Home Loan in UK- Essential Things to Know

Home Loan

Buying a personal home is everyone’s dream. While the prices of property skyrocket every passing day, people get to see more diversification in home loan options. Thanks to the ever booming market for homes in the UK that potential buyers have got several ways to apply for a mortgage.

Well, availability of so many options doesn’t mean that one should rush to accept the very first offer that comes their way. A buyer should first figure out pros and cons of every single option and then decide for the right one.

Getting Home Loan in UK

First of all, ask yourself if you really need to buy a home. In case, you are not a resident and looking to relocate to another country or another place within the same country then consider renting a home. Very often the factors like high interest rates and the high cost of living in an area increases benefits of renting a home rather than buying one.

Pre-requisite of Applying for Home Loan in UK

Apart from opportunity cost thing UK folks, particularly those who are not citizens must know about following necessary pre-requisite before they apply, for a home loan.

  1. Applicants must have proof of legal residence in the UK.
  2. They must possess personal identification documents like a passport.
  3. They should be able to prove their creditworthiness through valid legal documents.
  4. They should also have a work permit for UK.
  5. Applicnt must have steady soruce of income showing their ability to pay monthy mortgage installments.

For non-UK citizens being a resident is necessary to apply for home loan. Those, who are not resident but possess a valid work permit can also apply for loan, but not all the house finance companies cater to the such applicants.

Knowing about Interest Rate

Possessing a basic knowledge of how house mortgage companies charge the interest rate is also essential. Usually, there are two types of interest rates; SVR (Standard Variable Rate) and Bank of England (BoE) rate. Not all the offers match BoE and SV rates. In fact, they keep on fluctuating by going slightly high or low. Also, when you are looking to apply for a home loan in the UK have a close eye on various discount offers by the companies. Such offers are usually short-lived but they can help you save more.

Tips for Accepting the Best Loan Offer

What makes a home loan offer best, varies from person to person. Usually, factors that first time home buyer should consider differ from those who are looking to buy a home for renting or because they are relocating. One thing, is sure that applicants must not compromise on higher opportunity cost. Generally, they should closely monitor the interest rate, down payments or initial deposit requirements, tax factor, and an ease of making monthly interest payments.

Usually, an applicant must be strong in two areas; first, they should have a good credit history. Secondly, the should have a steady income that enables them paying their monthly installments.

Doing a Thorough Market Research

Before applying for home loan, an applicant must do a comparative research of different products to get the best offer. One should note that apart from initial payments and monthly installments, there are other payments such as broker’s fee, mortgage booking fee, property valuation fee and even some additional fee depending upon the nature of the transaction.

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