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Getting a mortgage can be really intimidating. Most likely you’ve spent years building up your deposit and trying to improve your credit score ready for this moment. You’re essentially attempting to prove that you’re trustworthy enough to be loaned hundreds of thousands of pounds. I used Habito to buy my house, and here’s my honest unsponsored opinion of their service.
How do you get a good deal on a mortgage?
Signing up for a mortgage is a bit of a minefield. Usually when you borrow money, the lower the percentage interest, the better. But this isn’t exactly the case with mortgages. Obviously, interest matters A LOT. While mortgage rates are usually between 1% & 5%, because of how substantial the amount of money you’re borrowing is, an increase of just 1% on your interest could add tens of thousands of pounds to what you have to pay back.
BUT it could be a better idea to go for a higher interest rate, regardless.
There’s the whole issue of how long you’d like your price to be fixed for. The best interest rates are usually on 1 year fix mortgages. HOWEVER, after you’ve had that mortgage a year, you’ll need to remortgage before it goes back up to the standard variable rate (which is usually high). Get a new mortgage and you might be faced with a £1,000+ product fee, which just completely wiped out the savings you made on the low interest rate. We also had a random £250 cashback given to us from our mortgage provider, so you need to take things like that into account too.
So, okay, you’ve gone for a longer fixed rate, and found the lowest interest around. Now you find out you can’t get it because of your LTV. LTV means loan to value. If you have a 10% deposit, you’re looking for a 90% loan to buy that house. The really good offers kick in at 80% or 75% LTV.
So yeah, it’s very complicated. I find it’s good to look at MSE’s mortgage comparison tool to filter out the ones you don’t qualify for. Then you should know a baseline of what a good deal is for you, before you actually choose a mortgage.
Why I chose to use a mortgage broker
When you’re shopping around for a mortgage there’s two basic options: go to a bank, or use a broker. The advantage of going directly to your bank is that it’s familiar. You’ve probably been to a bank before, and you might have already sat in one of those tiny rooms for a chat to open or close an account. That’s about it really. When you go and ask your bank for a mortgage, they can only show you the options from that particular bank. They might not be the best in the market, and they may not offer you the type of mortgage you really want. Even if they do have the dream, that all bells and whistles mortgage you’re after, what if you get rejected? Their second best option might be awful. It’s a bit of a risk.
A broker, on the other hand, can look at a much wider range of mortgages on your behalf. They should come with the knowledge of which mortgages you’re going to be accepted for, and the ones you haven’t got a hope of getting.
Why I chose Habito
The downside to using a broker is the fees. Some brokers charge you £500 for their services, while also getting commission from the mortgage providers themselves. You can see from my list of house buying costs that I didn’t pay for my broker. Habito is fee free – you even get a bonus £100 (and so do I) if you sign up using my referral link.
There are other free brokers, but Habito is special. It’s all online. I never had to physically go to any meetings, call anyone or even post off forms to apply for my mortgage. It’s a modern way to sort it out, all via live chat and PDF downloads of your documents. If you’re computer savvy it’s so easy.
If you’ve ever tried to get an appointment at a bank, you know how annoying it is. You can’t pop in at lunchtime, because you need to bring your partner, and you can’t go at the weekend because it only opens until 12pm on Saturday and there’s no availability. It’s rude.
Want to join a community of other people trying to buy their first home? Join my free Facebook group First Time Buyer Wannabes.
I just attempted to do something I consider to be less complicated than applying for a mortgage (moving an old pension) and it’s been a living hell of phone calls, paperwork and getting people to certify physical copies of my passport. Dealing with Habito was a dream.
What the Habito application process is like
Once you’ve got to the Habito site, click apply for a mortgage. The questionnaire is pretty short, and you’ll probably know most of it already. You will need to decide whether you want a fixed rate mortgage, and how long you’d like the fix to be. I’m not going to get into the pros and cons of that, but you can read more about them here.
I went for a five year fix, but as I always say, I’m not a financial adviser!
The live chat function on Habito is honestly so good. You’ll be assigned a mortgage expert, but you can ask a question at any time. If you ask something at 1 am, you’re going to have to wait until morning, but it really sped up the process for us.
We then got a mortgage suggested to us, and they’ll send you a giant document with the lifetime cost of loads of mortgages on it. It’s important to look at that because it shows you that sometimes having an upfront fee can save you money in the long run. When you find the right mortgage for you, and you’ve confirmed it with your mortgage expert you’ll be asked to upload your documents.
For our mortgage they only wanted 1 month’s bank statement, some proof of ID, and bills with our names on them. We’re pretty straightforward though, if you’re self employed or there’s something else complicated going on with your finances, they may ask for more information.
I really liked the ‘My Documents’ section. It was so easy to upload scanned things as and when I had them to hand, my boyfriend could email me over a copy of his driving licence when he was at work and I could add it then and there.
Once all your documents are in order, it’s time to wait and see if you’ll be accepted for a mortgage and get your mortgage in principle.
Habito customer service
After your offer has been accepted you’ll need to let Habito know. They’ll then deal with changing your details if the offer you have is different to the agreement in principle. Your new mortgage provider will need the address of the property so they can do their valuation. This is when you actually start dealing with old school banks and it all starts to get expensive and communication slows down. You can read more about the cost of buying a house in my blog.
If you have any updates you can still get in touch with your mortgage provider via Habito. I suggest that you be very specific, because there was a mix up with our mortgage after we got a reduction on the price of the house. It wasn’t a massive thing but I didn’t realise what I’d requested hadn’t happened until we actually paid our deposit.
Would I use Habito again?
YES. Totally. I’m a big fan of anything that will make my life easier. I’m in my twenties, I’m always on my phone, and I don’t want to waste perfectly good Saturday Kitchen watching time traipsing down town to have mortgage meetings.
Buying a house is already a drawn out, jargon filled process, but getting my mortgage was easy peasy. Remember, we both get a bonus £100 for getting a mortgage through my link, too.