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With interest rates racing upwards even faster than house prices, getting the right mortgage is more important than ever. Do your homework before you submit an application and you'll stand a better chance of living happily ever after, or until it's time to move up the property ladder.
1. Work out what you can afford
It's easy to fall in love with a property, but the cost really can be too high. If you can't afford the mortgage repayments, you could join the 14,000-plus households who had their homes repossessed in the first six months of 2007, according to the Council of Mortgage Lenders.
So work out a detailed budget including fees, stamp duty, moving costs and running costs such as utility bills and council tax, and stick to it.
2. Research the mortgage market
When it's possible to borrow as much as seven times your salary, a mortgage can be a terrifying commitment. Even a fixed rate deal can be a gamble. If rates fall, you could end up spending more than you need.
If they rise, you will be landed with a steep increase in repayments when the fixed rate period comes to an end. So do your research in advance and take impartial, expert advice.
Check out consumer advice from the Council of Mortgage Lenders at www.cml.org.uk, talk to a mortgage advisor or visit your bank. Scan financial websites, personal finance pages in the newspapers and specialist magazines. They'll all have useful advice that will help you make a better-informed decision.
3. Take a credit health-check
That means looking at your credit report, which is what a lender will do when you make an application. Your credit report lists your loans, credit cards, existing mortgages and any other credit you've taken out.
It also contains your repayment history and other information that helps lenders to assess the risk that you will not repay what you borrow. For example, a bankruptcy would count against you, while a track record of making repayments on time would weigh in your favour.
If you're buying with anyone else, get them to check their credit report too. Yours could be excellent but if your buying partner has any problems, it will affect both your chances.
Click here for a FREE copy of your credit report.
4. Understand how lenders make decisions
Mortgage lenders take the information on your application form and in your credit report and allocate a value to each item. The total is your credit score, also known as your credit rating. Generally, the higher it is, the easier you'll find it to borrow money.
But it isn't quite as simple as that. Every lender uses a slightly different calculation and some have different calculations for different mortgages. So you could have a different credit rating for every application.
The one constant in this process is your credit report, so make it as good as it can be.
5. Clear up misunderstandings
Make sure that your credit report is up to date and accurately reflects your circumstances. If you find anything you think is wrong, contact the lender that submitted the disputed information and explain why you disagree, you'll need to provide proof.
If you're right, they'll amend your report. And if something needs further explanation, for example, you once missed some repayments because of illness, you may be able to get a note added to your credit report that lenders will see when they search it.
Try to avoid so-called credit repair companies, they cannot help to change your credit history.
6. Register to vote
As a precaution against fraud, lenders use the electoral roll to check that you live where you say you do and are who you say you are.
If you aren't registered at your current address, they may ask for further proof of identity or even reject your application. You can download a voter registration form at www.aboutmyvote.co.uk.7. Find the mortgage you need
You can do a lot of work on this before you actually submit an application by asking potential lenders for detailed information.
Just be certain that they do not think you're actually applying, or they'll make application searches of your credit report. Application searches leave a record, known as a footprint, which will be seen by your chosen lender when you eventually apply.
They can cause major problems and affect your credit score, the lender may think you have been rejected repeatedly, believe you're desperate for money or even suspect a fraud. If necessary, insist that they only make a quotation search, which will not be seen by other lenders in future.
8. Check your credit report again
It's important to check your credit report again before you put in your application. That way, you can ensure that all your good work is reflected in it, spot any mistakes and double-check all your details one last time.
Then you're finally ready to fill out the application form.
You can check your credit report for free with CreditExpert, the online credit monitoring service from Experian - click here to get yours now.
