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How Do I Know When To Get a Mortgage?

Mar 27, 2013

Deciding when to take out a mortgage is a massive decision. It is influenced by a range of factors, from your current financial situation to your personal situation, as well as the current environment of the housing market. Moreover, you must consider the mortgage cycle – when exactly is the greatest time of month and year to get a deal. So when pondering whether to take out a new mortgage or switch mortgage providers, you need to look at the market, your current situation plus many other factors discussed below. 

Your Financial Situation 

There are many factors that will determine whether or not your finances allow you to be in a position to take out a mortgage. If this is your first mortgage, you’ll need to a good credit history and saving to allow you to qualify for a loan. On average you will need to put down a deposit of anywhere between £5-20k. 

Generally speaking, you can expect a loan that equates to roughly three and a half times your salary. There are, however, extra costs associated with getting a mortgage from survey fees to removal costs which can amount to a large sum. 

Your Personal Situation 

The most common reason people to look to buy a house – they are fed up of paying rent. Rightly so, if you can financially afford to get a mortgage, then getting on the property ladder is a great move. However it also comes down to marital status, kids and other factors that influence when the right time in your life to take that step is. 

The Housing Market 

In the current housing market climate, it is possible to take a calculated risk, although with the expectation that the market is in a depression. The selling price of homes are at their highest since 2007 and the property market crash, the average cost of homes rising to £219k (0.8% increase on 2012). New buyers can benefit from low-interest rates, with offers of 5 year fixed mortgages and the Government sponsored Funding for Lending schemes are making it easier to afford a deposit. 

New Mortgages 

If, like many, you already have a mortgage but may need to refinance or change to a new provider, then you’ll have to work out when your deal is ending and when is feasible to look at new lenders. If you switch your contract during the process, you face charges on your account. A lot of people look to move to a new fixed rate mortgage if they are about to move to standard variable-rate mortgages with their current lender however it is important to always seek advice. 

Mortgage Cycles 

The timing of a mortgage can be affected by whether lenders are in a good position to begin issuing new loans. The beginning of the month is often the best time to start applying for a new mortgage as lenders look to build up new deals for the month ahead. People tend to look at buying properties in the Summer months meaning demand is often high during these times, with early Winter often a great time to purchase. 

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