Some of you out there may be in the position of wanting to purchase your first home, however, there is one limitation which the majority of us face when contemplating taking any further steps; can we afford it?
Here at FleetMilne we have put together a list of ways to improve your mortgage chances, in the hope that this can become the year for purchasing your first home!
Be money saving savvy!
Deposit, deposit, deposit! The more money you save to put towards your deposit the better the chance of gaining the mortgage you’re after and attaining lower rates. Maybe move back home if you’re renting, rent somewhere cheaper, sell your car and use public transport, or just simply set up a savings account with high interest and any spare pennies you have at the end of each month transfer into there. If you show you can save money and are able to pay a large deposit, it presents you as more reliable at paying back the mortgage. There may be some places in the market offering 95% mortgages, however, most of the competition is at lower loan values, typically around 60%, so get saving!
Pay off your credit cards!
If you want to borrow money from banks, you must reduce the money you owe in the first place. If you take out a credit card, you are obligated to pay this back; if for some reason you cannot or you are struggling to, the banks will see this and will be less likely to lend you more money. Our suggestion would be to close down any credit cards you do not use, reduce or – if you can – cancel your overdraft, and if possible clear any personal loans in your name (providing they don’t come with early repayment charges).
Get credit record ready!
If you have previously had serious debt problems, you may struggle to find a lender who will authorise a mortgage for you. However, if your previous lending amounts have been minor, you are more likely to obtain a mortgage. Take a look at your record yourself, ensure everything is correct and you are not getting penalised as a result of someone else’s mistake – this can happen!
It might be worth applying to a lender for an agreement in principle. This is a statement from a lender saying that they are willing, in theory, to give you a mortgage subject to you providing more information about your circumstances and the lender approving your chosen property.
Also, as contradictory as this may sound, if your credit record is blank lenders will become suspicious! They want to see credit history so they can see how you handle debt and borrowing money. Our suggestion would be (if you do not have credit history) to take out a credit card and ensure you pay the amount back every month – this will inevitably increase your credit rating.
Be paperwork perfect!
Evidence is crucial in this position, particularly if you’re self employed. Lenders want proof of how much money you have coming in monthly and annually. The fuller your mortgage application the better your chances. Our recommendation would be to ensure ALL payslips are up to date and reflect your current income.
Research government schemes
There are a number of government schemes to help prospective buyers, especially first time buyers, get on the property ladder, so it is something that’s worth researching and looking into. This can range from an ISA that is tailored to help you save up for a deposit, to helping you obtain a mortgage guarantee. If you’re planning to buy to let, these schemes aren’t for you and firmly restrict you from renting the property. However, if you’re a first time buyer and you’re looking to live in the home yourself then these schemes are for you.
We hope you take our advice and manage to successfully get a mortgage!
If you would like more information about buying in Birmingham please contact Kirsty on 0121 366 0456 or email firstname.lastname@example.org