Photo by Erda Estremera on Unsplash
Buying a home is an exciting, but daunting time in your life, especially if you’re a first time buyer. Since the economic crash of 2008/2009, the mortgage landscape has changed drastically. Banks are now required to undertake far more due diligence on the people they lend money to.
While having a down payment, stable income and good credit report are two of the main factors in getting a good mortgage, they aren’t the whole story.
See A Home Loan Adviser
It’s not just the wealthy who can benefit from seeing a mortgage adviser. They often have great relationships with lenders and can access products that aren’t available to most borrowers. They can also advise you on any specialist mortgage products such as physician home loans and key worker loans.
Not only can they advise on home loans available but can also give you information on the things that you can do to improve your chances of being approved.
Control Your Spending
When assessing you for a mortgage, banks will look at your spending habits and conduct affordability checks. Even if you have a good salary, if a large proportion of it is committed to other spending, you may not be able to borrow as much as someone who has a much lower salary, but few outgoings.
To get your outgoings down, check that you’re getting a good deal on things like insurance, car loans and cell phone contracts.
Set yourself a realistic budget and stick to it.
Save Up For A Bigger Down Payment
The more money you pay upfront, the less you have to borrow. Those with larger down payments can also benefit from better interest rates, which can save you thousands of dollars across the term of the mortgage. 20% is the standard minimum for a downpayment. If you can increase this, even by a little, it will benefit your home loan application.
Use Credit Wisely
When used responsibly, credit card, car loans etc can actually improve your credit score. Make all of your payments on time and try to pay off as much of your debt as you can before applying for a mortgage.
Having some evidence of active credit is good, especially if you are paying it off in full each month. It is difficult for people with no credit history to find a lender. This might seem strange, that never needing to borrow money can prevent you from borrowing money.
Check your credit report often, and if there is anything on it that isn’t correct, or you disagree with, contact the credit agencies immediately to make sure that they correct any errors that might prevent you getting your home loan.
There are a number of Apps available to check your score directly, you can set up security alerts, so you know if someone is trying to obtain credit using your identity.