Most people cannot afford to pay for a house upfront and have to resort to getting a mortgage, which is basically a loan against the very property it is taken to purchase. The lender or the mortgagee in this case, lends money to the mortgagor (property owner) for the purchase of the home. The mortgagor then pays back the loan, along with interest, in installments, at the end of which he becomes sole owner and stakeholder in the property.

It is recommended that you contact a lender and obtain a mortgage before you actually start searching for a house. This will put you in a better position to negotiate and will ensure that you don’t lose out on a house of your choice waiting on a mortgage. Earlier, buyers were able to get 100% mortgages, but now lenders are averse to high-risk loans and require around 10-15% of the purchase price to be put in by the borrower. Generally, if your deposit is lower than 10% of the purchase price, you may be liable for a higher interest rate on your mortgage.

In order to get a mortgage, you first need to find one. Consult your estate agent first as he/she will be able to help you either get a mortgage or connect you to a mortgage broker, who will arrange it for you. If you are already using a bank, it might be prudent to ask your relationship manager to walk you through the bank’s offerings. Moreover, if you work with a financial firm, your employer may have mortgage packages available for employees.

Once you obtain quotes from different lenders, you will need to compare them in terms of payments, charges and leniency. A typical mortgage is about 25 years in length, but the time period can vary depending on the package you choose. However, before you can borrow money, the lender will consider your credit history and income. You are likely to have issues if your record shows that you have priors related to defaulting on payments or if you were declared bankrupt.

If you are taking a joint mortgage, along with a partner, the lender will be assessing both of you and your incomes. The decision to take a joint mortgage must be taken very cautiously, because even if your partner defaults on his/her share, you will be liable for the whole payment. Before you finally agree on the terms of the mortgage, go through the details and consider the following:

- Whether you will be able to continue with your present lifestyle after making the mortgage payments.

- Whether you will be able to continue making the mortgage payments if you lose your job or switch careers.

- Whether you will be able to continue making the payments if the interest rates hiked.

If you feel comfortable with a mortgage quote and feel confident you will be able to make regular payments and pay off the loan, you should get a mortgage in principle agreement from the lender, which you will furnish for sellers and agents when you go house hunting.

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