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| 6 Things You Should Know About 90% Mortgages |
By:
lexorleslie |
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There are a few things to be aware of if considering a 90% Mortgage in the current market :
a) House Prices are expected to fall in 2011. If they were to fall by more than 10% you could be left in negative equity. It is important to time your purchase right, and make sure you get a good deal. It is likely to be a buyers market throughout 2011 - so make sure you negotiate asking prices down in your favour.
b) There are far more 90% Mortgages available now than there were at the end of 2009. However, the rates tend to be significantly higher than mortgages available at lower loan to values (where you provide a larger deposit or have a larger equity margin).
c) Lending Criteria on higher loan to value mortgages is very tight. Lenders are being very chewy about who they offer a 90% Mortgage to. Try to avoid approaching lenders ad hoc - as too many credit search footprints on your credit file in a short period of time can impair your credit rating.
d) Think beyond the short term. The current market is uncertain to say the least. If you find a property you really want to buy, and you can get it at a very attractive price then fine. But it is not advisable to move forward unless you plan to stay in the property for at least 5 years.
e) Affordability, Affordability, Affordability. Mortgage Lenders and Advisers now have to carry out far more rigorous affordability checks. But, only you really know how much is readily affordable for you - so be true to yourself, and do not overstretch.
f) Plan for the worst, hope for the best. Taking out a mortgage is a serious financial commitment (to say the least). You should consider carefully how you would afford your mortgage if you lost your job or were unable to work due to illness or injury. It is prudent to have savings to cover at least 3 months outgoings in full. You should also take out a sensible range of insurance.
Hopefully this article has helped provide a few pointers to think about if you are considering applying for a 90% Mortgage.
There is nothing intrinsically wrong with a 90% Mortgage, or any high loan to value mortgage. But they do pose a greater risk of negative equity, so should be considered more carefully before you proceed to be as sure as you possibly can that taking out a 90% Mortgage is the right thing to do.
It is strongly advisable to seek independent mortgage advice from an FSA Authorised Mortgage Adviser to help you make wise and informed decisions.
For further information on 90% Mortgages go to www.90-mortgages.co.uk . |
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