If recent figures are to be believed getting a mortgage in 2012 is going to be incredibly difficult. According to the Bank of England, the average two-year fixed rate mortgage has increased from 2.9% last September to 3.45% in March. Additionally, other mortgage plans are also being hiked by some of the country’s leading lenders. So just how do you go about getting a decent mortgage in 2012?
Save up a large deposit
Banks are still worried about risk, particularly now that the economy has fallen back into recession. To minimise their risks they are asking for ever-larger deposits in exchange for the best mortgage rates.
Unfortunately, there is no use fighting this; rather you should put your time and effort into saving for a large deposit. At least 20% is necessary to access affordable Santander mortgages, but if you really want low monthly repayments 30-40% is better.
Santander mortgages cater to various deposit sizes, but their best rates for first time buyers start at around 85% loan to value.
Be prepared for more than just basic DIY
Property is not just a place to live that you want to turn into a home; it is an investment too. The trick is to climb the ladder with each and every property. An easy way to do this is to add value yourself through your own hard graft.
Similarly, if you are prepared to do a little work yourself you’ll be able to get a cheaper property that you can then add value to. A more affordable property means a smaller mortgage.
Clear all other debts
As mentioned above, Santander mortgages deal in risk. Banks do not want to lend to risky parties and if you appear to be risky you will not get the mortgage you want. Get all of your finances in order and clear as many outstanding debts as possible before even stepping foot into a mortgage adviser’s office.
Check your credit rating and if it’s not up to scratch do something about it. Even your student debt and past debts are looked at, so you need to prove to the bank that you are now a safe bet and you will be well into the future.
Get the latest mortgage news from The Telegraph and keep up to date with the best deals and offers.