The Secret To Getting The Cheapest Mortgage For Your New Home

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I have had many requests for a blog post about applying for mortgages, so in order to help you out I thought I would look into online mortgage brokers, as I hear a lot of good things about mortgage brokers in general, but I know that a lot of us prefer to do things online, as getting to a bank in person isn’t always as easy as it sounds to fit around work and other commitments!

There is a new company on the block called Habito, which was founded by Daniel Hegarty when he found his own property owning venture stressful due to the mortgage provider he was with entering incorrect information and resulting in the application being declined. Luckily it all worked out in the end, but he was left thinking that it was quite an archaic process, which seemed unnecessarily complicated.

Enter Habito – the UK’s online mortgage broker, which works like a more advanced comparison website – searching over 70 lenders out there to find you the best product and then guiding you step-by-step through your application with their human experts via live chat. That definitely beats going to a million different banks and websites to find the best deal! I love to save money, but I also like to make the most out of my time as well, and this would definitely help with that.

Benefits of using an online mortgage broker:

  • You will not be charged broker fees. These are usually hundreds of pounds, but Habito makes its money instead from the procuration fee paid by the lenders. It is free to use!
  • It will save you time – you won’t need to personally search through all of the mortgage providers as it will do it for you after you enter all of your information.
  • It is available 24/7, which is perfect if you are usually busy every day with work and general commitments.
  • Habito will search through the 70 lenders that it has available, but if it finds that you could get a better deal with a mortgage provider they are not linked with, they will let you know.
  • It is tailored to your own personal circumstances and needs.

If you want to speak to someone and not do it all completely online, there are mortgage advisors available to speak to you via live chat or on a phone call. This is where they differ from a comparison site – which tends to spit out a figure of the cheapest provider based on some very basic information you provide, whereas Habito have that computer element overlaid with human expertise that gives you professional and personalised advice based on your own situation and more detailed information that you provide.

How Does It Work?

You have to answer some questions on the website, so that they can see which mortgages you would be eligible for. No documentation is needed until it gets to the stage where it needs to all be sent to the lender.

You will use the Digital Mortgage Advisor which is like a live chat – to find out how much you are able to borrow on your mortgage (just a note that you don’t need to borrow the maximum amount that is offered to you!). Once you have entered the information about yourself and anyone who is applying with you, you will be given a Habito Mortgage Illustration which will show you how much you can borrow, and which lender would offer you those amounts.

It breaks down your maximum borrowing amount, your chosen borrowing amount, your property price, the mortgage term, loan-to-value ratio and your monthly payments. It also works out the stamp duty you would pay on the property, as well as any fees associated with the product. These are then subtracted from your total savings to create an accurate idea of how much you would have left for a deposit.

An affordability assessment is carried out to ensure that the best lender is found – but no footprint is left on your credit report.

The next step, once you know what you can afford, is to find a property. Once you have done that, you are able to put in an offer. In order to get your offer accepted on your dream property, you need to get an Agreement In Principle from your lender – which is when you can speak to Habito and they will help you obtain this from the lender that will get you the best deal.

How Much Can I Borrow?

I need to chime in here with my personal finance blogger hat on and advise that you do not take out the maximum amount that you are eligible to borrow, as that is a mistake that many people make, without thinking about how much they will have to pay back over many years, with a lot of interest to be paid off as well. You can still get an amazing property for a little bit less, and you will thank yourself for that in the future.

Most lenders require that you have at least 10% deposit saved up, but the more that you have to put down means the more likely that you will get the mortgage, the less time you will have to pay the mortgage, and there will be thousands saved down the line on interest also. Basically, the more the better!

You will also need to show that your income is consistent – some lenders require that you have been in your job for a certain length of time, and if you are self-employed you will need to show your records from a longer amount of time (usually 2-3 years).

If you have both of the above, you should be able to, generally speaking, borrow around 4 times your salary. This is different depending on how many of you are getting the mortgage, and if you have any dependents. All of this will be shown when you fill in your details!

Which Mortgage Types Are Available Through Habito?

I’ve had a look at the different types of mortgage that Habito can help with, because there are so many different ones and different circumstances that people are in! These are the kinds that Habito can help with:

  • First time buyers
  • Shared ownership
  • Help To Buy scheme (let your advisor know that you want to do this, and please note that you will have to arrange the equity loan yourself)
  • Buy-to-let mortgage
  • Offset mortgage
  • Second mortgages

Re-Mortgaging

They can also help if you want to re-mortgage, and are happy to tell you if it’s worth waiting a little bit or switching early.

When you remortgage from one lender to another, the new lender will be responsible for sorting all this out. They will organise a solicitor who will make all the arrangements necessary in order to pay off the existing lender. You will only need to set up a direct debit for your new mortgage.

First, you get your property valued. Then you submit your mortgage offer through Habito! Once your case is agreed you will receive a mortgage offer from the lender to confirm you are ready to transfer your mortgage.

Once that’s done, the solicitor will handle the transfer of deeds from one lender to another. At completion, a letter will be sent through for you to sign, and you will receive a letter from the new lender confirming that your mortgage has been transferred and your new mortgage payment will be taken based on your requested date and account details.

Habito is directly authorised and regulated by the FCA, so are held to the highest standards of conduct. They will always show the true cost of your loan, not just the advertised rate. No jargon, no fees and no misinformation.

Since their launch in April 2016, they have completed £250 million in mortgage applications – you can read what some of their customers have to say about them on Trustpilot.

If you would like to refer your friends to Habito, they are offering £100 for every completed sign up – more info can be found here.

What do you think, does a mortgage broker sound appealing to you?

Habito sponsored this post, but all opinions are my own.

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